John Taylor doesn´t agree and cites a paper by Bordo and Haubrich. He puts up this revealing chart showing growth in real output in the first four quarters of recoveries.

In other writings, Taylor argues that what´s keeping the economy ‘tied down’ is bad economic policy which is causing uncertainty. I prefer to think it´s mostly bad monetary policy. So I check how nominal spending (NGDP), something closely controlled by the Fed, behaved in the two years following the year of the recession through that are identified by Bordo & Haubrich as ‘financial crises recessions’. I leave out the 1914-16 recovery because that was mostly due to WWI spending and distorts the comparison.

I also note by a dashed line the cumulated real growth after the recession ended in 2009. It´s easily the weakest real and nominal recovery of all. Taylor correctly notes that after the 1990/91 recession recovery wasn´t strong due to the fact that the recession was very shallow, so there was not much ‘catch-up’ to do.

The Fed can make the speed of the nominal recovery be pretty much whatever it wants – with much being translated into a real recovery. More, it could well have avoided the depth of the fall. But it´s nice to have a popular excuse for why recovery is progressing at a snail´s pace.

Update: Scott Sumner says:

The central bank determines the total level of spending. No society can ever run out of the ability to manufacture more spending, unless the central bank runs out of paper and ink.

In an op-ed at the WSJ Michael Bordo summarizes his research with Haubrich:

There’s a belief among policy makers that serious recessions associated with financial crises are necessarily followed by slow recoveries—like the one we’ve experienced since mid-2009. But this widespread belief is mistaken. To the contrary, U.S. business cycles going back more than a century show that deep recessions accompanied by financial crises are almost always followed by rapid recoveries.

From Dean Baker, a great quote pertinent to the topic:

We are so far lost in economic debates that we are not even at the point of arguing whether the earth goes around the sun of vice-versa. We can’t even agree that the sun rises in the east.