Financial market functioning was deeply impaired across most asset classes and geographies. As a result, the U.S. economy endured a sudden stop. In the final quarter of last year and the first quarter of this year, private employment registered the largest two-quarter percent decline since the mid-1970s, and real GDP saw the most dramatic decline in a half-century.
These data are clearly indicative of significant deviance, and justifiably raise questions about the success of the growth experiment. Policymakers are rightly disposed to react, respond, and revisit the presumed record of accomplishment. In revising the historical record, however, we should not too hastily discount the preceding period of prosperity.