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By Jason Stipp | 12-29-2010 02:26 PM

What Has Carried the Recovery?

Morningstar's Bob Johnson highlights the biggest contributors and detractors to GDP since the economy hit bottom in 2009, and offers insight on what 2011 may hold.

Jason Stipp: I'm Jason Stipp for Morningstar.

Over a year into the economic recovery, we want to take a step back and see how far we dropped throughout the recession, how far we've come back, and what have been the biggest contributors to GDP growth.

Morningstar's Bob Johnson, director of economic analysis recently dug into the data, and he is here to tell us little bit about what he found.

Thanks for joining me, Bob.

Bob Johnson: Nice to be here.

Stipp: So can you give us a big picture take: how far we went down and how far we've come back so far into the recovery.

Johnson: Well, in terms of GDP this recession we fell 4.1%. And that's roughly marked from December of 2007 to the middle of 2009. So, also one of the longest recessions that we had, and that's a 4.1% total decline.

Now, in the recovery, measured again from June of 2009 until the end of September, which is the last time we have data for, we're up about 2.9% in terms of GDP. So we haven't gotten everything back yet.

Stipp: So, would you characterize this, so far, as a somewhat subpar recovery. Was it a little bit weaker than you might expect given how far we dropped?

Johnson: Well, ... I had hoped for more of a V-shaped type of recovery than we actually got, because usually the harder you fall the better you recover, and for a number of reasons we didn't see that this time. I think housing is certainly a part of that equation. Usually housing construction comes back, and we didn't see that this time around, and the consumers' penchant for buying overseas goods this time was a little bit stronger, and that held us back a little bit as well.

So, it's been a subpar recovery. It's better than recovery of 1990, and better than the recovery of 2001, the two previous recessions, but not as good as some of the ones like the 1980 and 1970 recovery.

Stipp: You recently dug into the data to figure out what has contributed to the recovery--what have been the major factors driving it. It's really a fascinating look into the nature and the construction that we had coming back out of this recession. Can you talk a little bit about what were some of the biggest additive things to GDP since we started to have the economy come back online?

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