Historical Economic Grace Period?

[Schneed10]

Originally Posted by firstdown

I could blame Bush and congress if this was just a US slump but its world wide so its hard to blame one person. The economy will come back with or without the stimulas its rather or not it speeds up the recovery.

Agreed.

There could have been more oversight on the mortgage mess, there could have been more oversight on corporate greed, and stuff like that. But it never would have prevented the recession. In fact, if there were tough oversight of mortgage lending, there never would have been the strong GDP growth we saw prior to the recession.

With oversight, we would have experienced slower growth and a softer recession. Without it, we experienced faster growth and a harder recession. In the end, roughly the same number of people would have been out of work for roughly the same amount of time.

Now with a stimulus, we can dig ourselves out sooner but the economy won't bounce back as high. Without a stimulus, it will take longer to dig out, but growth will bounce back higher when we do eventually pull out.

Policy can affect the severity of ebbs and flows, but it can't change the unemployment x time quotient, and it can't change the GDP growth over time.