“All you have to do is prioritize spending,” she said.
But for a coterie of economists who have studied decades of downturns, the recovery from the most recent recession is likely to be one of the most difficult and protracted in U.S. history, simply because of the recession’s unusual nature.
If it follows the patterns of other similar crises, the recovery of the U.S. economy could take years, according to influential studies by economists Ken Rogoff and Carmen and Vincent Reinhart.
Their research, which is well known at both the White House and the Federal Reserve, likens the economic situation in the United States today to past crises in countries around the world. It finds, for example, that in those countries unemployment rates and housing prices did not return to pre-recession levels for a decade or more after the crisis.
“The first lesson is don’t expect miracles,” said Carmen Reinhart, an economist with the Peterson Institute for International Economics.
This dismal outlook rarely enters the political rhetoric, even though current and former U.S. economic officials have read and admired these studies. In part, this is because speechwriters favor optimism. And in part, this is because figures such as Fed chief Ben S. Bernanke and former Obama economic adviser Lawrence H. Summers have hoped that the right government action could avert the mistakes that delayed past recoveries.
But in recent weeks, the ratcheting downward of U.S. economic growth and the panic on Wall Street caught many by surprise, bringing extra attention to the bleaker forecasts from the economic historians.
“The Wall Street forecasters and the Fed forecasters had always viewed the recovery as right around the corner,” Rogoff said. “But it never came. The last couple of weeks has been the nail in the coffin of the view that we were going to see a normal recovery.”
Normally, recovery from a recession is at least as rapid as the decline that led to the downturn.
Of the 11 U.S. recessions after World War II and before the most recent downturn, all but one were followed by recoveries that were more rapid than the decline, according to research by economists Michael D. Bordo and Joseph Haubrich. In those instances, gross domestic product, a standard measure of the size of the economy, rose faster than it had fallen.
But because of the severity of this recession, and the accompanying crises hitting banks and other lenders, economists believe that recovering from it will be more difficult.