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This Recovery's GDP Bounce-Back Is Much Lower Than In 1982 And 1933

March 7, 2016 1:15 pm
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The U.S. is now more than six years removed from the worst of the economic recession that followed the Financial Crisis in 2008-2009. The Federal Reserve finally deemed the economy strong enough for its first modest interest rate hike back In December. However, global economic jitters, particularly in China, have now clouded the outlook for future rate hikes.

Is there any real reason to doubt the strength of the U.S. economic recovery? As it turns out, there is.

According to data from the St. Louis Fed, post-downturn GDP growth this cycle has significantly lagged the recoveries seen following the Great Depression and the economic downturn in the early 1980s. The Federal Reserve may have finally met its targets for a rate hike in terms of metrics like unemployment rate, but the graph below illustrates just how lackluster the U.S. economic recovery has been up to this point.

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“As the graph clearly shows, GDP bounced back with gusto after the Great Depression and also ramped up moderately after the early 80’s recession,” the Fed wrote on its blog.

GDP growth would have to undergo quite a spike in the next couple of years to put it on par with previous recoveries.

So far this year, economic fears have manifested themselves in the U.S. equity markets. The SPDR S&P 500 ETF Trust (NYSE: SPY) is down 1.5 percent in 2016, while the flight-to-safety trade SPDR Gold Trust (ETF)(NYSE: GLD) is up 19.3 percent.

Disclosure: the author holds no position in the stocks mentioned.

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