New Op-ed piece: The financial crisis can't explain the current slow recovery
Carmen Reinhart and Kenneth Rogoff’s book, “This Time is Different,” has become the bible of the Obama administration. Their claim that recoveries after financial crises are naturally much slower than other recoveries has given President Obama a lot of cover. Their argument may be widely accepted by the media but has not been so readily accepted by economists.
Reinhart and Rogoff lashed out at academic critics a couple of weeksago with an opinion piece in Bloomberg and again recently on CNN, attacking economists who disagree with them as blinded by support for Mitt Romney.
Our current recovery has been the weakest since at least World War II. Thirty-nine months since the recovery started in June 2009, job growth has been only 2 percent. During the average recovery since 1970, job growth over the first 39 months has averaged over 8 percent. The current recovery has failed to keep up with the growth in the working age population. Unlike past recoveries, much of the drop in the unemployment rate simply reflects people giving up looking for work. And there is no doubt there was a financial crisis.
But the financial crisis is not the explanation for the slow recovery. . . . .