Economists regularly point out that the U.S. has recovered from the recession of 2007-2009 much more strongly than other countries. If only it were so.
The U.S. recovery does stand out if one looks only at gross domestic product. For example, the Organization for Economic Cooperation and Development pointed out recently that U.S. gross domestic product has expanded by more than 10 percent in inflation-adjusted terms since the end of 2007, while the euro area and Japan have stagnated.
It’s important, however, to take account of population growth. The U.S. population is growing much faster than those of either Europe or Japan, so its economy should grow faster as well. Yet what really matters for individuals is the change in output per person.
The U.S. is still ahead, but not by much. Even in the euro area, cumulative growth in per capita, inflation-adjusted GDP falls only about 4 percentage points short of the U.S. And within the euro area, Germany actually exceeded the U.S. by 5 percentage points.
If we focus on jobs, the U.S. looks worse. The fraction of those aged 25 to 54 with a job was about 2.5 percentage points lower in 2015 than in 2007. This shortfall is roughly the same as in the euro area. In the U.K. and Japan, though, the prime-aged employment-to-population ratio already exceeds its 2007 level – by about one and two percentage points, respectively. In Japan, the level is about five percentage points higher than in the U.S.
There are some useful lessons here. First, if the U.S. recovery hasn’t been comparatively strong it’s hard to argue that the Federal Reserve’s unconventional monetary-policy measures such as large-scale asset purchases have been more effective than those of other central banks. Perhaps the Fed should be more cautious in regarding asset purchases as a substitute for more conventional policy tools.
Second, there’s clearly more the U.S. can do to get people back to work. The prime-age employment data suggest that it has done about as well since 2007 as the euro area, a region that includes high-unemployment economies such as Spain and Greece. That can’t be described as a desirable outcome.
Narayana Kocherlakota is a columnist for Bloomberg View and a professor of economics at the University of Rochester.