While we're all accustomed to the idea that what goes up must come down, we've been hoping that the opposite is true, at least as far as the economy is concerned.  Mark Wynne of the Federal Reserve Bank of Dallas refers to this way of thinking as the "plucking theory," a phrase coined by Milton Friedman.  The idea is that the depth and speed of a recession would be matched by a mirrored recovery, like a plucked guitar string.  Well, that certainly hasn't happened this time around. 

In an Economic Letter, Wynne shares some data from past recessions and recoveries that were indeed V-shaped, and then looks at the current situation:

How does recent U.S. experience compare? It depends to some extent on when we define the crisis start. Conventional wisdom holds that it began in August 2007, and the NBER dates the business-cycle peak in December 2007. Chart 3A  (below) overlays the recent behavior of U.S. real GDP relative to its precrisis trend along with the data plotted in Chart 2, taking 2007 as the first year of the crisis. Here we are just looking at annual GDP numbers. The numbers for 2011 and 2012 are based on projecting the 2010 number forward using the September 2011 Blue Chip Economic Indicators consensus. It is striking how closely the path of U.S. real GDP trend tracks the average path of output in countries that have experienced banking crises. In that sense, the pace of the recovery is more or less in line with what we might have expected based on the historical experience of other countries that have undergone similar banking calamities.

However, reasonable people might argue that the crisis really started in 2008, when major U.S. financial institutions got into serious difficulties, ultimately prompting major policy initiatives from fiscal and monetary authorities to help stabilize the economy. Does this date change things?

Chart 3B shows how the comparison is affected if we take 2008 as the beginning. If anything, the fit to the historical patterns observed elsewhere is better. That is, the performance of real GDP in the U.S. is almost exactly in line with what we might have expected based on the average experience of other countries that have gone through banking crises.

Read the full Economic Letter here.