The Great Recession lasted from December 2007 to June 2009, making it the longest downturn since World War II. The Great Recession was particularly painful in various ways, despite its short duration. From its peak in 2007Q4 to its bottom in 2009Q2, real gross domestic product (GDP) plummeted 4.3 percent, the greatest drop in the postwar era (based on data as of October 2013). The unemployment rate grew from 5% in December 2007 to 9.5 percent in June 2009, before peaking at 10% in October 2009.
The financial repercussions of the Great Recession were also disproportionate: home prices plummeted 30% on average from their peak in mid-2006 to mid-2009, while the S&P 500 index dropped 57% from its peak in October 2007 to its trough in March 2009. The net worth of US individuals and charity organizations dropped from around $69 trillion in 2007 to around $55 trillion in 2009.
As the financial crisis and recession worsened, worldwide policies aimed at reviving economic growth were enacted. Like many other countries, the United States enacted economic stimulus measures that included a variety of government expenditures and tax cuts. The Economic Stimulus Act of 2008 and the American Recovery and Reinvestment Act of 2009 were two of these projects.
The Federal Reserve’s response to the financial crisis varied over time and included a variety of unconventional approaches. Initially, the Federal Reserve used “conventional” policy actions by lowering the federal funds rate from 5.25 percent in September 2007 to a range of 0-0.25 percent in December 2008, with the majority of the drop taking place between January and March 2008 and September and December 2008. The significant drop in those periods represented a significant downgrading in the economic outlook, as well as increasing downside risks to output and inflation (including the risk of deflation).
By December 2008, the federal funds rate had reached its effective lower bound, and the FOMC had begun to utilize its policy statement to provide future guidance for the rate. The phrasing mentioned keeping the rate at historically low levels “for some time” and later “for an extended period” (Board of Governors 2008). (Board of Governors 2009a). The goal of this guidance was to provide monetary stimulus through lowering the term structure of interest rates, raising inflation expectations (or lowering the likelihood of deflation), and lowering real interest rates. With the sluggish and shaky recovery from the Great Recession, the forward guidance was tightened by adding more explicit conditionality on specific economic variables such as inflation “low rates of resource utilization, stable inflation expectations, and tame inflation trends” (Board of Governors 2009b). Following that, in August 2011, the explicit calendar guidance of “At least through mid-2013, the federal funds rate will remain at exceptionally low levels,” followed by economic-threshold-based guidance for raising the funds rate from its zero lower bound, with the thresholds based on the unemployment rate and inflationary conditions (Board of Governors 2012). This forward guidance is an extension of the Federal Reserve’s conventional approach of influencing the funds rate’s current and future direction.
The Fed pursued two more types of policy in addition to forward guidance “During the Great Recession, unorthodox” policy initiatives were taken. Credit easing programs, as explored in more detail in “Federal Reserve Credit Programs During the Meltdown,” were one set of unorthodox policies that aimed to facilitate credit flows and lower credit costs.
The large scale asset purchase (LSAP) programs were another set of non-traditional policies. The asset purchases were done with the federal funds rate near zero to help lower longer-term public and private borrowing rates. The Federal Reserve said in November 2008 that it would buy US agency mortgage-backed securities (MBS) and debt issued by housing-related US government agencies (Fannie Mae, Freddie Mac, and the Federal Home Loan banks). 1 The asset selection was made in part to lower the cost and increase the availability of finance for home purchases. These purchases aided the housing market, which was at the heart of the crisis and recession, as well as improving broader financial conditions. The Fed initially planned to acquire up to $500 billion in agency MBS and $100 billion in agency debt, with the program being expanded in March 2009 and finished in 2010. The FOMC also announced a $300 billion program to buy longer-term Treasury securities in March 2009, which was completed in October 2009, just after the Great Recession ended, according to the National Bureau of Economic Research. The Federal Reserve purchased approximately $1.75 trillion of longer-term assets under these programs and their expansions (commonly known as QE1), with the size of the Federal Reserve’s balance sheet increasing by slightly less because some securities on the balance sheet were maturing at the same time.
However, real GDP is only a little over 4.5 percent above its prior peak as of this writing in 2013, and the jobless rate remains at 7.3 percent. With the federal funds rate at zero and the current recovery slow and sluggish, the Federal Reserve’s monetary policy plan has evolved in an attempt to stimulate the economy and meet its statutory mandate. The Fed has continued to change its communication policies and implement more LSAP programs since the end of the Great Recession, including a $600 billion Treasuries-only purchase program in 2010-11 (often known as QE2) and an outcome-based purchase program that began in September 2012. (in addition, there was a maturity extension program in 2011-12 where the Fed sold shorter-maturity Treasury securities and purchased longer-term Treasuries). Furthermore, the increasing attention on financial stability and regulatory reform, the economic consequences of the European sovereign debt crisis, and the restricted prospects for global growth in 2013 and 2014 reflect how the Great Recession’s fallout is still being felt today.
How many times has the United States had a recession?
A recession is defined as a two-quarters or longer decline in economic growth as measured by the gross domestic product (GDP). Since World War II and up until the COVID-19 epidemic, the US economy has endured 12 different recessions, beginning with an eight-month depression in 1945 and ending with the longest run of economic expansion on record.
Recessions in the United States have lasted an average of 10 months, while expansions have averaged 57 months.
What caused the United States’ last recession?
The Great Recession, which ran from December 2007 to June 2009, was one of the worst economic downturns in US history. The economic crisis was precipitated by the collapse of the housing market, which was fueled by low interest rates, cheap lending, poor regulation, and hazardous subprime mortgages.
What caused the Great Depression of 1957?
The reasons for the 195758 recession were numerous. One of the primary elements that triggered the recession was the Asian flu epidemic. During this time, the Asian flu was particularly deadly, killing an estimated 80.000 persons in the United States alone. As a result of the flu, worker supply was reduced, output decreased, and economic activity dropped.
Prior to the onset of the recession, monetary policy tightening was another element that triggered the downturn. Price rises were not slowed by monetary policy aimed at lowering inflation. Instead, monetary policy tightening with a higher interest rate has hampered house building. House supply fell as a result of the slower building, and housing prices rose as a result.
The weakening of new automobile sales, which plummeted by more than 30%, was also attributed to tighter monetary policy. Falling automobile sales were enormous, leading to the bankruptcy of Ford Motor Company and widespread panic in the industry. The bankruptcy of Ford was thought to be one of the key causes of the recession. To combat the steep drop in car sales, some dealers resorted to hire salespeople to work for 64 hours straight to sell cars.
This failure impacted demand for commodities and raw materials, resulting in a dramatic drop in US exports of more than $4 billion. In the first half of 1958, exports to Canada, West Europe, and Japan were 30 percent lower than the previous year. The trade deficit expanded as a result of this circumstance, exacerbating the recession.
What caused the recession of the 1980s?
The 1981-82 recession was the greatest economic slump in the United States since the Great Depression, prior to the 2007-09 recession. Indeed, the over 11% unemployment rate attained in late 1982 remains the postwar era’s pinnacle (Federal Reserve Bank of St. Louis). During the 1981-82 recession, unemployment was widespread, but manufacturing, construction, and the auto industries were especially hard hit. Despite the fact that goods manufacturers accounted for only 30% of overall employment at the time, they lost 90% of their jobs in 1982. Manufacturing accounted for three-quarters of all job losses in the goods-producing sector, with unemployment rates of 22% and 24%, respectively, in the home building and auto manufacturing industries (Urquhart and Hewson 1983, 4-7).
The economy was already in poor health prior to the slump, with unemployment hovering at 7.5 percent following a recession in 1980. Tight monetary policy in an attempt to combat rising inflation sparked both the 1980 and 1981-82 recessions. During the 1960s and 1970s, economists and politicians thought that raising inflation would reduce unemployment, a tradeoff known as the Phillips Curve. In the 1970s, the Fed used a “stop-go” monetary strategy, in which it alternated between combating high unemployment and high inflation. The Fed cut interest rates during the “go” periods in order to loosen the money supply and reduce unemployment. When inflation rose during the “stop” periods, the Fed raised interest rates to lessen inflationary pressure. However, as inflation and unemployment rose concurrently in the mid-1970s, the Phillips Curve tradeoff proved unstable in the long run. While unemployment was on the decline towards the end of the decade, inflation remained high, hitting 11% in June 1979. (Federal Reserve Bank of St. Louis).
Because of his anti-inflation ideas, Paul Volcker was chosen chairman of the Federal Reserve in August 1979. He had previously served as president of the New York Fed, where he had expressed his displeasure with Fed actions that he believed contributed to rising inflation expectations. In terms of future economic stability, he believes that rising inflation should be the Fed’s top concern: “It is what is going to give us the most troubles and cause the biggest recession” (FOMC transcript 1979, 16). He also thought the Fed had a credibility problem when it comes to controlling inflation. The Fed had proved in the preceding decade that it did not place a high priority on maintaining low inflation, and the public’s belief that this conduct would continue would make it increasingly difficult for the Fed to drive inflation down. “Failure to continue the fight against inflation now would simply make any subsequent effort more difficult,” he said (Volcker 1981b).
Instead of focusing on interest rates, Volcker altered the Fed’s policy to aggressively target the money supply. He chose this strategy for two reasons. To begin with, rising inflation made it difficult to determine which interest rate targets were suitable. Due to the expectation of inflation, the nominal interest rates the Fed targeted could be relatively high, but the real interest rates (that is, the effective interest rates after adjusting for inflation) could still be quite low. Second, the new policy was intended to show the public that the Federal Reserve was serious about keeping inflation low. The anticipation of low inflation was significant, as present inflation is influenced in part by future inflation forecasts.
Volcker’s initial efforts to reduce inflation and inflationary expectations were ineffective. The Carter administration’s credit-control scheme, which began in March 1980, triggered a severe recession (Schreft 1990). As unemployment rose, the Fed relented, reverting to the “stop-go” practices that the public had grown accustomed to. The Fed tightened the money supply further in late 1980 and early 1981, causing the federal funds rate to approach 20%. Long-term interest rates, despite this, have continued to grow. The ten-year Treasury bond rate surged from around 11% in October 1980 to more than 15% a year later, probably due to market expectations that the Fed would soften its restrictive monetary policy if unemployment soared (Goodfriend and King 2005). Volcker, on the other hand, was insistent that the Fed not back down this time: “We have set our course to control money and credit growth.” We intend to stay the course” (Volcker 1981a).
High interest rates put pressure on sectors of the economy that rely on borrowing, such as manufacturing and construction, and the economy officially entered a recession in the third quarter of 1981. Unemployment increased from 7.4% at the beginning of the recession to nearly 10% a year later. Volcker faced repeated calls from Congress to loosen monetary policy as the recession worsened, but he insisted that failing to lower long-run inflation expectations now would result in “more catastrophic economic situations over a much longer period of time” (Monetary Policy Report 1982, 67).
This perseverance paid off in the end. Inflation had dropped to 5% by October 1982, and long-term interest rates had begun to fall. The Fed permitted the federal funds rate to drop to 9%, and unemployment fell fast from over 11% at the end of 1982 to 8% a year later (Federal Reserve Bank of St. Louis; Goodfriend and King 2005). Inflation was still a threat, and the Fed would have to deal with several “inflation scares” during the 1980s. However, Volcker’s and his successors’ dedication to actively pursue price stability helped ensure that the 1970s’ double-digit inflation did not reappear.
Who is responsible for the 2008 Great Recession?
The Lenders are the main perpetrators. The mortgage originators and lenders bear the brunt of the blame. That’s because they’re the ones that started the difficulties in the first place. After all, it was the lenders who made loans to persons with bad credit and a high chance of default. 7 This is why it happened.
Is the US economy in freefall?
Indeed, the year is starting with little signs of progress, as the late-year spread of omicron, along with the fading tailwind of fiscal stimulus, has experts across Wall Street lowering their GDP projections.
When you add in a Federal Reserve that has shifted from its most accommodative policy in history to hawkish inflation-fighters, the picture changes dramatically. The Atlanta Fed’s GDPNow indicator currently shows a 0.1 percent increase in first-quarter GDP.
“The economy is slowing and downshifting,” said Joseph LaVorgna, Natixis’ head economist for the Americas and former chief economist for President Donald Trump’s National Economic Council. “It isn’t a recession now, but it will be if the Fed becomes overly aggressive.”
GDP climbed by 6.9% in the fourth quarter of 2021, capping a year in which the total value of all goods and services produced in the United States increased by 5.7 percent on an annualized basis. That followed a 3.4 percent drop in 2020, the steepest but shortest recession in US history, caused by a pandemic.
Is there going to be a recession in 2021?
The US economy will have a recession, but not until 2022. More business cycles will result as a result of Federal Reserve policy, which many enterprises are unprepared for. The decline isn’t expected until 2022, but it might happen as soon as 2023.
What happened to the economy after 2008?
Many conservatives believe that our economy can only thrive if the federal government stays out of the way. Many progressives argue that in our free market system, the government must intervene at times to defend the public welfare and ensure broad-based economic growth. Today’s politics are defined by this discussion.
Americans of all political stripes should agree, however, that between 2008 and 2010, swift and decisive government action was required to avoid a second Great Depression and to aid our economy’s recovery from the biggest recession since the 1930s. After all, the evidence shows that between 2008 and 2010, three acts of Congress signed by two presidents led to the conclusion of the Great Recession of 20072009 and the ensuing economic recovery. Specifically:
- The Troubled Asset Relief Program (TARP) of 2008 saved our financial system from near-certain collapse, sparing the United States’ financial system from tragedy.
- The American Recovery and Reinvestment Act of 2009 averted a second Great Depression and ushered in a new era of economic development.
- By lowering the payroll tax and extending prolonged unemployment insurance benefits, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 bolstered the economy’s fragile recovery.
The top ten reasons why these three major government interventions in the economy were effective will be discussed in this column. But first, let’s go through why such government intervention was required in the first place.
Do you recall the circumstances in 2008? Our economy, job market, and Wall Street were all on the verge of collapsing. Between then and today, there was a strong economic contraction accompanied by large job losses and steep stock market losses, which was followed by slow, uneven, but nonetheless steady economic growth and labor and financial market recoveries. Federal government actions played a significant role in ensuring that the deep dive was not prolonged and that the recovery occurred sooner than it would have otherwise. The job market, the economy, and the financial markets are all showing signs of improvement. This is a tremendous improvement over the condition in 2008.
The Troubled Asset Relief Program of 2008, the American Recovery and Reinvestment Act of 2009, and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 all contributed to the United States’ economic recovery. These three moves happened at a critical juncture in the economy’s development, when the economy was on the verge of significant damage unless policymakers took decisive, targeted, and swift action.
The Troubled Asset Relief Program (TARP) was established in October 2008 to allow the federal government to utilize $700 billion to help the banking system recover. During the last months of 2008, much of that money was spent infusing capital into failing banks, ensuring that our financial system would not collapse. In February 2009, the American Recovery and Reinvestment Act was signed into law, enacting a package of tax cuts and expenditure initiatives totaling $787 billion that would last almost two years, through the end of 2010. The Recovery Act provided additional unemployment insurance and Social Security benefits almost immediately, but infrastructure funding did not begin until the summer of 2009. As the Recovery Act’s benefits expired in December 2010, Congress enacted fresh payroll tax cuts and provided extended unemployment insurance benefits.
The result: After each measure was passed, financial markets, the economy, and the labor market began to improve fast, and money began to flow into critical ailing markets. These three policy measures did exactly what they were supposed to do: policymakers intervened to prevent the economy from deteriorating.
To be true, if these policy initiatives had provided more bang for their money, they would have been more effective and efficient. More assistance for distressed homeowners may have been included in the Troubled Asset Relief Program. More infrastructure money might have been included in the Recovery Act, and payroll tax cuts and prolonged unemployment insurance benefits should have been separated from needless tax cuts for the wealthy. However, conservative hostility to more effective and efficient policy interventions made none of this additional assistance for our economy and workers conceivable.
Nonetheless, the Troubled Asset Relief Program averted the financial system’s collapse. While there are reasonable concerns about the program’s design, whether the benefits were distributed equally, and if the monies were spent as efficiently as possible in the long term, there’s little doubt that it benefited the economy. A new Great Depression was averted thanks to the Recovery Act. The payroll tax cuts and prolonged unemployment insurance benefits are still helping to boost the economy today.
Starting with the Troubled Asset Relief Program, the Recovery Act, and the most recent payroll tax cuts and extended unemployment insurance benefits, here’s a review of the 10 ways recent economic and financial data prove that each of these three policy initiatives succeeded as intended.
Loan tightening eased with the introduction of the Troubled Asset Relief Program
In the fourth quarter of 2008, a net high of 83.6 percent of senior loan officers said they were tightening lending conditions for commercial and industrial loans, up from 19.2 percent in the fourth quarter of 2007. Throughout 2009, this ratio decreased steadily. The senior loan officer ratio is an oblique but informative indicator of how simple or difficult it is for firms and individuals to obtain a bank loan.
Similarly, in the fourth quarter of 2008, a net 69.2 percent of senior loan officers said they were tightening prime mortgage criteria, up from 40.8 percent in December 2007, before declining to 24.1 percent in the fourth quarter of 2009. After the Troubled Asset Relief Program stabilized the US financial sector, banks began to relax lending criteria. Following TARP, the business and mortgage credit markets became less tight.
Interest rates ease shortly after the Troubled Asset Relief Program is enacted
The risk premium, or the difference between the interest rate on risk-free U.S. Treasury bonds and the interest rate on mortgages, peaked at 2.2 percent in December 2010, up from 1.5 percent when the Great Recession began in December 2007. After money from the Troubled Asset Relief Program came into credit markets, the gap narrowed to 1.6 percent by January 2009. During normal economic times, this risk premium is normally approximately 1%.
Corporate bond risk premiums rose from 0.9 percent in December 2007 to 1.9 percent in December 2008, before decreasing to 1.6 percent in January 2009. The risk premium rose at first as lenders became concerned about the health of other banks, then declined as the Troubled Asset Relief Program stepped in to help struggling institutions. Because the program’s effectiveness reduced financial market risk, homeowners and businesses had to pay less for their loans.
The specter for deflation disappeared after the passage of the Troubled Asset Relief Program and the Recovery Act
Falling inflationary expectations have the potential to lead to deflation, or a downward spiral in prices. Deflation exacerbates a recession by causing firms and consumers to postpone big purchases in the hope of lower costs. In the fall of 2008 and winter of 2009, the United States’ economy was threatened by deflation; however, the adoption of the Troubled Asset Relief Program and the Recovery Act put people’s minds at ease.
Based on the difference between inflation-protected and noninflation-protected U.S. Treasury bonds, the predicted inflation rate for the next five years was -0.24 percent in December 2008, down from 2.2 percent in December 2007, indicating that deflation was a real concern among investors. The difference between Treasury Inflation Protected Securities and Treasury bonds of the same maturity is what determines the predicted inflation rate for that particular maturityin this case, five years. By May 2009, inflation predictions had surpassed 1% once more, and by December 2009, they had risen to 1.9 percent. Expected price rises of roughly 2% will encourage businesses to invest more and consumers to spend more than they would otherwise, while lesser price increases will cause them to hold off on their purchases.
Economic growth prospects brightened with the passage of the Recovery Act
Expectations for future economic growth are important for actual growth because businesses will invest more, banks will lend more, and consumers would spend more than they would otherwise if they believe the economy will improve more quickly. The nonpartisan Congressional Budget Office raised its growth forecasts for 2010the first full year following the Recovery Act’s enactmentfrom 1.5 percent to 2.9 percent in March 2009. And, sure enough, economic activity accelerated.
Three of the four quarters of 2008 saw the economy contract, and annual inflation-adjusted GDP growth in the first quarter of 2009 was -6.7 percent. However, once the Recovery Act was signed into law in the second quarter of 2009, our GDP only shrank by 0.7 percent in that quarter as government spending increased. The economy then increased by 1.7 percent and 3.8 percent in the third and fourth quarters of 2009, owing in large part to the tax cuts and expenditure measures approved under the Recovery Act starting to trickle into people’s and businesses’ pockets.
Job losses quickly abated due to Recovery Act spending
Job losses fell by 82.3 percent in the final three months of 2009, from an average of 780,000 per month in the first three months of 2009, when the law was passed, to 138,000 per month in the final three months of 2009. During the same time period, employment losses in the private sector fell by 83.2 percent, from 784,000 to 131,000 on average. The first quarter of 2009 was a clear turning point in the labor market, with the steepest employment losses of the Great Recession.
Personal disposable incomes started to rise again with help from the Recovery Act
People lost jobs in droves from the middle of 2008 to the first quarter of 2009, resulting in a drop in personal disposable after-tax income. Higher unemployment insurance benefits, bigger Social Security payments, and lower personal taxes, all of which were part of the Recovery Act, boosted personal disposable earnings in the second quarter of 2009. This provided immediate assistance to families in need.
Families ended up with more money in their pockets as a result of the new law’s immediate expenditure, despite job losses continuing at the same time. However, other Recovery Act provisions that took a bit longer to promote consumer spending aided in improving employment prospects by putting more money in people’s pockets.
Industrial production turned around with infrastructure spending spurred by the Recovery Act
From December 2007 to June 2009, industrial productionthe output of manufacturing and utilitiesdeclined steadily. When infrastructure expenditure from the Recovery Act began to pour into the economy in July 2009, industrial production began to grow again. After six months of sustained growth, industrial production was 3.7 percent higher in December 2009 than in June 2009.
After-tax income grew more quickly following the payroll tax cut
In the first quarter of 2011, when the payroll tax cut and an extension of extended unemployment insurance benefits were granted, after-tax income increased by 1.3 percent, the quickest rate of growth since the second quarter of 2010. As the labor market continued to add new positions at a modest pace, the payroll tax cut put more money in people’s pockets. The new funds bolstered an economy that was still struggling to establish its feet, assisting in the expansion of jobs.
Job growth accelerated with the payroll tax cut
Indeed, during the first three months of 2011, the labor market added an average of 192,000 jobs each month, up from 154,000 jobs in the previous three months. The payroll tax cut gave a sluggish labor market some more impetus.
Household debt burdens fell more quickly with the payroll tax cut
Households had more money in their pockets, and they used some of it to pay down their crushing debts. In the first quarter of 2011, the ratio of total household debt to after-tax income declined 2.5 percentage points, more than twice as fast as in the fourth quarter of 2010 and quicker than in any other quarter of 2010.
These ten reasons why the federal government’s rapid and decisive action changed an impending second Great Depression into the difficult but steady economic recovery we are witnessing today are based on credible economic statistics. There is plenty of room for argument regarding the amount to which the government should be involved in the day-to-day operations of the economy, but there is no reason to doubt why our economy isn’t locked in a long-term depression like to the Great Depression of the 1930s. In this situation, well-intentioned government measures did exactly what they were designed to do.
Endnotes
The net percentage is the difference between the share of loan officers who say lending standards are tightening and the share who say lending standards are loosening. A positive number indicates that more loan officers tightened lending criteria than loosened them, whereas a negative number indicates that more loan officers softened loan standards. The Federal Reserve Board of Governors, Board of Governors of the Federal Reserve System, Board of Governors of the Federal Reserve System, Board of Governor “Senior Loan Officer Opinion Survey on Bank Lending Practices,” Federal Reserve Board Docs, http://www.federalreserve.gov/boarddocs/snloansurvey/201205/fullreport.pdf.
Calculations are based on the following: “http://www.federalreserve.gov/releases/H15/, “H.15 ReleaseSelected Interest Rates.” The interest rates on conventional mortgages are shown below. Bond rates are for corporate bonds with a AAA rating.
The interest rate differential between nominal five-year US Treasury bonds and inflation-indexed five-year Treasury bonds is known as inflation expectations. Similar tendencies can be seen when comparing Treasury bonds of various maturities. Calculations are based on the following: “H.15 Interest RatesSelected Rates.”
New growth data for 2008 and 2009 was added by the Congressional Budget Office, indicating that the recession was worse than previously anticipated. Congressional Budget Office, “Budget and Economic Outlook” (2009); Congressional Budget Office, “A Preliminary Analysis of the President’s Budget and an Update on CBO’s Budget and Economic Outlook” (2009); Congressional Budget Office, “A Preliminary Analysis of the President’s Budget and an Update on CBO’s Budget and Economic Outlook” (2009). (2009). For 2010, the real inflation-adjusted economic growth rate was 3%. National Income and Product Accounts, Bureau of Economic Analysis (Department of Commerce, 2012). The brighter forecast for 2010 helped to offset a recession that was worse than expected. The CBO lowered the 2009 growth rate from -2.2 percent in January to -3 percent in March. However, the CBO forecasted a -1.5 percent growth rate from December 2008 to December 2009 in both January and March 2009. If the economy is predicted to enter a worse recession and then recover more swiftly in 2009, the changes from December to December can stay the same, even if total year growth rates fall. That is, the CBO predicted that the Recovery Act would add quickly to growth in the second half of 2009, offsetting a higher forecast fall in the first half. However, there are no quarterly growth predictions provided.
National Income and Product Accounts of the Bureau of Economic Analysis were used to compile this data.
Calculations based on Current Employment Statistics from the Bureau of Labor Statistics (Department of Labor, 2011). Because monthly job changes are rather unpredictable, the bullet point shows three-month averages. However, monthly job changes follow the same pattern as quarterly averages.
Calculations based on Current Employment Statistics from the Bureau of Labor Statistics.
Lower taxes and other forms of social spending had a greater impact on rising personal disposable incomes in the second quarter of 2009 than in the following quarters. In the following quarters, neither taxes nor other forms of social spending decreased. Instead, taxes remained low, and social spending remained high, with the exception of Social Security, health care, and unemployment insurance. Throughout the rest of 2009, as more people retired and claimed unemployment insurance benefits, Social Security and unemployment insurance payouts grew. Calculations based on National Income and Product Accounts from the Bureau of Economic Analysis.
Calculations are based on the following: “http://www.federalreserve.gov/releases/g17/default.htm, “Industrial Production and Capacity Utilization G-17.”
Calculations based on National Income and Product Accounts from the Bureau of Economic Analysis.