Summary of The Disappointing Recovery of Output after 2009

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Even before the Great Recession, the US economy was pushing against substantial headwinds that continue to blow. Research from economists John G. Fernald, Robert E. Hall, James H. Stock and Mark W. Watson points to a structural downshift in total factor productivity and a drop in labor force participation as major contributors to the tepid output growth since the bottom of the recession in 2009. GetAbstract recommends this authoritative report to policy experts, economists and analysts seeking to better understand the dynamics behind the US post-crisis economy.

In this summary, you will learn

  • How much the US post-Great Recession recovery lags that of previous recessions, and
  • How total factor productivity and labor force participation have contributed to sluggish output growth.
 

About the Authors

John G. Fernald is a senior research adviser at the Federal Reserve Bank of San Francisco. Robert E. Hall, James H. Stock and Mark W. Watson are professors at Stanford, Harvard and Princeton Universities, respectively.

 

Summary

What should have been a robust US recovery from the deep downturn of the Great Recession has instead turned into plodding growth. Per capita business output in the post-recession period has underperformed its average in previous recoveries by 1.8 percentage points annually. Public sector demand deficits, resulting from cuts in federal and local government spending, explain part of the performance drag, as does weak business capital investment. However, anemic total factor productivity (TFP) growth – output that reflects technological efficiency – along with decreasing numbers of people in the workforce are behind most of the sluggish growth. Both of these phenomena predate the Great Recession.


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    Ashish Agarwal 11 months ago
    An apt and timely analysis with on the mark conclusions. Although, is it sufficient to deduce the problem causing factors without laying out specific, workable, policy suggestions to overcome these?