Obama and Reagan: A tale of two recoveries

Reagan had an advantage over Obama: The recession of the early 1980s was caused by runaway inflation, which the Federal Reserve countered by hiking interest rates. When inflation dropped, the Fed lowered rates and a massive economic boom resulted.

“The monetary policy run by [Fed chairman] Paul Volcker was extremely successful,” said Rudolph Penner, a former director of the Congressional Budget Office. “When inflation went away, that laid the groundwork for a very rapid recovery.”

The major causes of the recession that started in December 2007 were a banking crisis and housing bubble that exploded during President George W. Bush’s final months in office. Plus, interest rates were already low heading into the recession.

The damage to the economy was not easy to fix in the short-run, said Greg Valliere, chief political strategist at the Potomac Research Group.

“We nearly fell off a cliff, and people have short memories. I think the threat to the country was far greater in 2008 than in the early 80s, which was a garden variety recession.”