The Recession In Context

This post at Powerline is excellent:

Hysteria prevails in Washington, with "never let a crisis go to waste" the mantra. Loose talk about the present recession is so pervasive that many people don't have a clear idea how it fits in the context of earlier downturns. The web site Calculated Risk prepared these helpful charts. This one shows the durations and percent decline on an annualized basis of the postwar recessions, with the current one showing a cumulative decline of 3.4%. What jumps out at me is the extraordinary stability of our economy for the last 25 years; an entire generation has come of age without experiencing what used to be considered a routine down-turn. Click to enlarge:

There is no technical definition of a depression, but a 10% GDP decline is sometimes used as a benchmark. This chart shows real GDP declines, peak to trough, starting with the Great Depression. Note that the post-war decline lasted only eight months and was considered a good thing, a wind-down from WWII. Again, click to enlarge:

What does it all mean? So far, the current recession looks a lot more like the other post-war recessions than the Great Depression. The unique feature of today's economy is not the decline (so far) in GDP, but the financial crisis that has created chaos in our banks. Ironically, the Obama administration seems to have relatively little interest in that topic. They can't even staff the Treasury Department, and have yet to come up with a coherent plan for shoring up the financial system. If the trend line continues downward, many will conclude that the Obama administration's fecklessness is at least partly responsible.

I get two big takeaways from this. First is the general caution about applying some perspective and facts to the emotion and hysteria. As I've blogged about numerous times before, our situation isn't exactly rosy, but it is far from the outright crisis that Obama and his minions have been shrieking about.

That brings us to the second takeaway: doing the first thing isn't the same as doing the right thing. If we would, as a collective American people, stop and think a little bit about this situation before leaping to drastic conclusions, we would be able to avoid making some mis-steps that could have serious repercussions in the future.

That's exactly why Obama has been stoking the fires of hysteria - he knows that without the panic, he'll never get his re-making of America accomplished because it's fundamentally not a change that most Americans will accept.

People are figuring this out in growing numbers, as literally every situation Obama addresses is the 'worst' crisis blah blah blah, and the only cure he apparently knows is to spend trillions of dollars to 'fix' it. Let's keep things factually based and informative, and spread the word of what's really going on. It's our best shot at restoring some sanity to this country.

There's my two cents.