A new study by Harvard economists Carmen M. Reinhart and Kenneth S. Rogoff makes a surprising argument: The American economy is actually in pretty good shape.
The research, presented last week at a meeting of the American Economic Association, reviewed 100 significant financial crises over the past 200 years, both in the U.S. and abroad. The results? We’re relatively healthy. While the average decline in GDP over nine American recessions was about 9%, the U.S. experienced a decline of just 5% during the most recent one. And though it historically takes about 7.4 years for an advanced country to climb back to their pre-crisis peak, the U.S. did so in 6 years.
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So what has contributed to the U.S.’s relative success? The two economists give a few explanations, The New York Times reports. For one, by making major stimulus moves and fiscal decisions early on in the recession, losses during the crisis were relatively limited. And compared with some European countries, the U.S. also was more effective in restructuring debt through foreclosures, and had an easier time borrowing money—while countries like Greece had to resort to severe austerity measures to pay their bills.