As the chart above shows, this has been the weakest recovery on record. If it had been "normal," the economy would have recovered by now to its long-term growth trend (about 3% per year). Instead, we have a shortfall of about 10%, which is equivalent to lost output and lost income of roughly $1.7 trillion dollars. This is huge, and it needs to be front and center in our national policy debate. Why has the recovery been so weak?
The charts above very likely describe at least part of the problem. One reason this has been the weakest recovery ever is that there have never been so many people receiving unemployment insurance compensation for so long. Way more than ever before. Congress saw fit to create an emergency unemployment insurance compensation program in mid-2008 that by the end of 2009 was covering almost 6 million people. This was an unprecedented display of "generosity" and "compassion" that may have cost the economy something on the order of a trillion dollars.
Combine the massive expansion of unemployment benefits with the almost $1 trillion that was squandered on a faux "stimulus" package and you are talking about real money down the drain. With the best of intentions, Congress ended up hurting the very people it was trying to help. The trillion or so that was essentially flushed down the toilet could have created many millions of jobs and higher incomes that would have done wonders for middle class prosperity.
If there is a silver lining to this awful cloud, it is that the emergency compensation program is winding down, and now covers only 1.3 million people. The number of people and the percent of the workforce now on the dole is rapidly approaching levels that in the past were considered "normal." There's a decent chance that this will help restore some of the economy's vitality in the next year or two. Millions more people now have a new reason to seek out and accept a job (even if it pays less than they were earning before), and employers now may find that with expected labor costs declining it makes sense to expand their workforce.
Unfortunately, the labor market is still oppressed by the uncertainties, added costs and regulatory burdens of ObamaCare, but that may be changing for the better soon. The ObamaCare train wreck in ongoing, and it's highly unlikely the program will survive in anything like its current form for much longer.
There is no shortage of pundits declaiming that the stock market is another bubble in the making, but it's not impossible that the market is instead looking across the valley of despair to a brighter future.