What Could Have Been: Avoiding Great Depression 2.0

Sept. 20, 2010

KEY FINDINGS:

• Compared to the recessions of the past twenty years, the Great Recession has been the severest with regards to the duration and level of unemployment, low labor force participation and loss of jobs.

• Newly available analysis by the Congressional Budget Office and economists Mark Zandi and Alan Blinder demonstrate that federal policymakers’ actions on monetary and fiscal policy minimized the impact of the recession on workers and the broader economy.

• The Congressional Budget Office modeled the impact of the Recovery Act on Gross Domestic Product (GDP) and found that GDP is now 1.5 percent to 4.0 percent higher than it would have been without the Recovery Act. The unemployment rate in 2010 will be 0.7 to 1.8 percentage points lower than it would have been, and payroll employment will be between 1.3 million and 3.3 million jobs greater than it would have been.

• Early estimates by the Center on Budget and Policy Priorities in December 2009 suggested that key provision of the Recovery Act kept 6 million Americans out of poverty. For North Carolinians, the analysis suggests that 206,000 North Carolinians were kept out of poverty and a million North Carolinians were protected from more economic hardship.

• Data from the Current Population Survey released by the U.S. Census Bureau last week finds that the Recovery Act improvements to programs like unemployment insurance kept 3.3 million Americans out of poverty in 2009. The elderly poverty rate was at a record low due to the support of Social Security and the boost to it provided under the Recovery Act.