SLIDE 1
Change in real GDP
1965-2015
Source: U.S. Bureau of Economic Analysis, Federal Reserve Economic Data (FRED)
Are we ready for the next recession? Introductory remarks by David - - PowerPoint PPT Presentation
Are we ready for the next recession? Introductory remarks by David - - PowerPoint PPT Presentation
Are we ready for the next recession? Introductory remarks by David Wessel March 21, 2016 Change in real GDP 1965-2015 Source: U.S. Bureau of Economic Analysis, Federal Reserve Economic Data (FRED) Our question today: What could fiscal and
SLIDE 2
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Why is Productivity Growth So Slow?
Background for the session on Productivity March 11, 2016
Our question today:
What could fiscal and monetary policy do if the next recession hits in the next 1-3 years?
SLIDE 4
Debt
1940-2041, Percentage of GDP
20 40 60 80 100 120 140 160 180 1940 1960 1980 2000 2020 2040
Historical Current Policy Source: CBO (2010), CBO (2016), Auerbach and Gale (2016) Low Interest Rates through 2041
A few fiscal facts…
SLIDE 5
A few fiscal facts…
Total Deficits or Surpluses
1966-2026, Percentage of GDP
Source: CBO, 2016 Budget and Economic Outlook
SLIDE 6
A few fiscal facts…
Source: Exchange
U.S. 10 Year Treasury Yields
2006-2016
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Automatic stabilizers during and after the Great Recession
- 1600
- 1400
- 1200
- 1000
- 800
- 600
- 400
- 200
2007 2008 2009 2010 2011 2012 2013 2014 2015
Automatic Stabilizers During and After the Great Recession
Deficit w/o Stabilizers Automatic Stabilizers Billions of US$
Source: CBO
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Programs
Originally Committed Ultimate Cost TARP 600 40 Economic Stimulus Act of 2008 170 170 American Recovery and Reinvestment Act (ARRA) of 2009 808 832 Cash for clunkers 3 3 Additional emergency UI benefits 90 90 Education Jobs and Medicaid Assistance Act 26 26 Other stimulus 20 20 Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 189 189 Temporary Payroll Tax Cut Continuation Act of 2011 29 29 Middle Class Tax Relief and Job Creation Act of 2012 125 125
Total
2060 1524
Note: ARRA excludes AMT Patch
Discretionary Fiscal Policy During and After the Great Recession
Source: Center on Budget and Policy Priorities (CBPP)
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Could we do it again if we needed a fiscal stimulus?
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Effective federal funds rate
1975-2016
Monthly, Not Seasonally Adjusted Source: Board of Governors of the Federal Reserve System (FRS)
Monetary Policy
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Fed Balance Sheet
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- 0.8
- 0.7
- 0.6
- 0.5
- 0.4
- 0.3
- 0.2
- 0.1
Switzerland Denmark Sweden Euro area Japan
Negative Rates
(policy rate, as of March 2016) Source: Respective central banks, Goldman Sachs Research
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Global real interest rates
Source: Bank of England. Black line is taken from King and Low (2014), based on the average 10-year spot yield on inflation-linked bonds in the G7 (ex. Italy).
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