How This Recovery Is Abnormally Slow

The slow recovery from the financial crisis and recession of 2007 – 2009 has become a centerpiece of the Presidential election. In last Tuesday’s debate, Mitt Romney, picking up on a theme that has been emphasized by John Taylor, contrasted the current slow recovery with the much faster recovery from the 1981 – 1982 recession. During the past two weeks, there has been an intense focus on a comparison of the current recovery with recoveries from other financial crises. On October 11, Taylor, using historical data from a paper by Michael Bordo and Joseph Haubrich, argued that the current recovery is much slower than the average of previous American recessions associated with financial crises. This was followed by an October 14 paper by Carmen Reinhart and Ken Rogoff who argue that the aftermath of the U.S. financial crisis has been typical of the recoveries from other severe financial crises, an October 15 reply by Taylor, an October 16 rejoinder by Reinhart and Rogoff, an October 17 piece by Paul Krugman, and an October 17 reply by Taylor.