October 20, 2015
COMETH THE MOMENT, COMETH THE MAN:
Don't Look Back in Anger at Bailouts and Stimulus : Without the emergency measures of 2008-09, the U.S. economy would be far worse off today. (ALAN S. BLINDER And MARK ZANDI, Oct. 15, 2015, WSJ)
TARP, fiscal stimulus, quantitative easing and auto bailout remain dirty words to many people who increasingly blame them for prolonging the Great Recession and the slow pace of recovery. But in a study released Thursday for the Center on Budget and Policy Priorities, we found the reverse to be true: These extraordinary policies ended the crisis and jump-started an economic recovery that is stronger in the U.S. than in most countries.Specifically, we estimate that:• The peak-to-trough decline in real gross domestic product, which was barely more than 4%, would have been close to a stunning 14%.• The contraction would have lasted three years, more than twice as long as it did.• More than 17 million jobs would have been lost, about twice the actual number.• Unemployment would have peaked at just under 16%, rather than at 10%.• The federal budget deficit would have ballooned to $2.8 trillion, equal to 18% of GDP, compared with its actual peak of 10%.• Today's economy would be far weaker than it is--with real GDP about $800 billion lower, 3.6 million fewer jobs, and unemployment still at 7.6%.The overwhelming nature of the fiscal and monetary policy responses is the main reason we didn't suffer a much-worse fate.
The U.S., indeed the world, was fortunate that W was president when the credit crunch hit and that Ben Bernanke, though he bears some responsibility for triggering it, was at the Fed.
Posted by Orrin Judd at October 20, 2015 7:15 PM
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