State of Our Recovery: Ritholtz Chart

Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
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Philippa Dunne and Doug Henwood, managers of the Liscio Report, have been updating the chart below.

They originally found the chart in an International Monetary Fund report featuring a study of major banking crises by Carmen Reinhart and Ken Rogoff.

Dunne said of the chart:

It probably will come as a big surprise to most people that employment is actually doing better and the stock market is doing worse than the typical post credit crisis recovery.

The chart features four major economic indicators: employment, consumer prices, interest rates and stock prices. It compares our current recovery to the average of 15 previous financial crises. Much of the anecdotal criticism of the current recovery has argued that employment has been lagging while the stock market has run too far. But as you can see in the updated chart, employment in the U.S. is actually greater than the average post-crisis recovery.

Meanwhile, stocks have rallied almost 200 percent but are still lagging behind the chart's average.

Dunne goes on to say:

Many economists have been making the mistake of looking to a garden variety recession for guidance in how the present recovery may play out. Recoveries from financial crises, such as the one we just had, tend to be more severe and long-lasting. People should expect a long slog through the swamp before we get to a more normal and coherent economic footing.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Barry L Ritholtz at britholtz3@bloomberg.net