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BUSINESS

'This Is Not a Recovery at All': Stanford's Lazear




By Bruno J. Navarro, Producer

NEW YORK (CNBC) -- The U.S. economy grew at a rate of 2.4% since the second half of 2009, which hardly represents a comeback, Stanford University economics professor Ed Lazear said Wednesday.

"The problem is, this is not a recovery at all," he said on CNBC's "The Kudlow Report." "We haven't made up for the lost ground, and that's unprecedented."

Lazear, who also chaired President George W. Bush's Council of Economic Advisers from 2006 to 2009, authored a Wall Street Journal op-ed piece this week, titled, "The Worst Economic Recovery in History," in which he used historical data to argue that the current period of growth is anemic at best.

In the article, Lazear writes: "The Great Depression started with major economic contractions in 1930, '31, '32 and '33. In the three following years, the economy rebounded strongly with growth rates of 11 percent, 9 percent and 13 percent, respectively."

The New Deal, which involved a series of economic measures implemented from 1933 to 1936, did not figure into Lazear's arguments.

Instead, he focused on lagging growth in the postwar period to the current recession, from 1947 to 2007.

During that period, he wrote, "the average annual growth rate for the U.S. was 3.4%. The last three decades have experienced somewhat slower growth than the earlier periods, but even in the period 1977-2007, the average growth rate was 3%.

Lazear cited the private nonprofit National Bureau of Economic Research, which determined that the recovery began in the second half of 2009.

"Since that time, the economy has grown at 2.4%, below our long-term trend by either measure," he wrote. "At this point, the economy is 12% smaller than it would have been had we stayed on trend growth since 2007."

Asked by host Larry Kudlow for his take on the Dow Jones Industrial Average -- up more than 13% over the past six months, and 18% over the past two years -- Lazear said that hardly represented a recovery.

Lazear noted that the Dow was near 14,000 pre-recession and now struggles to maintain 13,000.

"It's four years later," he said. "We should be is approximately 12% better, and we're not."

Lazear laid blame for the economic sluggishness with the Obama administration's policies on trade, taxes, regulation and health care, all of which "have not been conducive to business growth."

--Written by Bruno J. Navarro at CNBC.