The Broader Market

By Jordan Eizenga

As mentioned last week, Mark Zandi and Alan Blinder have produced the most comprehensive assessment of the government’s response to the financial crisis in a piece entitled “How the Great Recession Was Brought to an End.” The government was far from perfect in its response (particularly with respect to the size of its stimulus program).  That being said, the conclusions from the Zandi and Blinder research make clear that the government’s response did much to improve our economic situation.  In particular, they conclude that:

1.  By 2011, real GDP is $1.8 trillion (15 %) higher because of the government’s policies.
2. There are almost 10 million more jobs and the unemployment rate is approximately 6.5 percentage points lower than otherwise would have been the case if the government did not enact these policies.
3. The inflation rate is roughly 3 points higher than it would have been – 2 percent instead of -1 percent.

In the words of Zandi and Blinder themselves (neither of whom are liberal economists), “that’s what adverting a depression means.”