Study: Government response to crisis staved off new Great Depression

[ProSense]

Study: Government response to crisis staved off new Great Depression

By Ian Swanson

The U.S. government’s unprecedented response to the financial crisis staved off another Great Depression, according to a new study released Wednesday.

Entitled “How we ended the Great Recession,” the paper by Moody’s Analytics Chief Economist Mark Zandi and Princeton professor Alan Blinder argues controversial policies enacted by the Bush and Obama administrations, the Federal Reserve and Congress increased GDP growth and saved 8.5 million jobs.

The paper says the much-criticized Troubled Asset Relief Program (TARP), Federal Reserve policies that increased the supply of money and stress tests to the nation’s big banks likely had a more powerful impact on the economy than the $787 billion stimulus enacted by Congress.

But it also concluded the stimulus raised GDP in 2010 by about 2 percent and held the unemployment rate 1.5 percentage points lower than it otherwise would have been, adding 2.7 million jobs to U.S. payrolls.

Without any of the policies, the authors concluded real GDP would have fallen by 7.4 percent in 2009 and a further 3.7 percent in 2010. Instead, GDP fell by 2.4 percent in 2009, and is expected to expand by 2.9 percent in 2010.

more

[DevonRex]

1. That's an excellent read. Thanks ProSense. K&R nt

[jpak]

2. K&R and bookmarked

and will be used to refute anti-Obama nonsense

yup!

[impik]

3. That's not what i hear on the MSM and DU

So i know it must be false.

[jpak]

4. please cross-post this in GD

thanks

jpak

[TBF]

5. That is good news,

can we now talk about ending the wars so we can free up more tax dollars for infrastructure, education, job creation, etc?

[Kurt_and_Hunter]

6. Quite true. A potential depression was turned into a needlessly severe, needlessly long recession...

...with no end in sight.

But yes, had nothing whatsoever been done things would have been much worse.

[ProSense]

7. Yes, a lot more should have been done

but a matter of reality got in the way.

I would love to see Democrats gain at least three more seats in the Senate.