The Bush Economy

A new EPI paper: A Feeble Recovery
The fundamental economic weaknesses of the 2001-07 expansion

• Of the 10 expansions since 1949, as measured
from the end of the recession (trough) to the end
of the expansion (peak), the expansion from 2001
through last year ranks last in average growth of
GDP, investment, employment growth, and employee
compensation.

• GDP growth in the latest expansion was a full 40%
slower than the post-World War II average (2.7%
versus 4.8% in previous expansions).

• Despite tax changes that were promoted as incentives
to increase investment, average growth in total
investment over the latest expansion was less than
half of the post-WWII average, and ranked last in
this group.

• Compared to the start of the last recession (the peak
that occurred in the fi rst quarter of 2001), the percent
of the population employed declined by 1.5
percentage points by the end of 2007. Th e only
previous drop in this measure relative to a previous
business cycle peak came during the mini-expansion
of the early 1980s, and the drop in the latest expansion
was fi ve times as large.
If this employment-to-population ratio had
remained constant, there would have been roughly
3.2 million more jobs, or an additional 39,000 jobs
created each month in the U.S. economy over the
course of the most recent expansion.

• Corporate profi ts were the only area of strength in
the latest full cycle, ranking 2nd strongest among the
last the prior 10 cycles.