Digging Out from the Great Recession

Abstract

The recession that began in December 2007 and ended officially 19 months later in June 2009 was the worst recession in more than 60 years. The economy has begun expanding again. But for workers, the pain is not yet over. Unemployment remains above 9%, where it has been for the last 20 months. In my remarks, I examine how things could have gone so wrong for the U.S. economy. I discuss the dimensions of the crisis confronting the job market, the extent of the decline in private sector demand, and the inadequacy of the policy response. I consider the sources of the federal budget deficit in the short term and long term. Finally, I conclude with a menu of policy initiatives for digging out from the Great Recession.