Although the economy has begun growing again, it may be a while before the unemployment rate shows steady improvement. The unemployment rate is considered a lagging indicator, meaning that its ups and downs happen some time after the ups and downs of other indicators of economic activity. For example, more than a year elapsed before the unemployment rate trended downward following the end of the 1990-1991 and 2001 recessions. This led the two to be labeled jobless recoveries. By contrast, after four earlier recessions the unemployment rate began a sustained decline within four to five months. This report examines the relationship between economic growth and the unemployment rate to anticipate possible future developments.

Contents: (1) Background: Severity of the 2008-2009 Recession; Policy Responses to the Financial Crisis and Recession: Monetary Policy Actions; Fiscal Policy Actions; (2) Is Sustained Economic Recovery Underway?; (3) The Shape of Economic Recovery: Demand Side Problems?: Consumption Spending; Investment Spending; Net Exports; Supply Side Problems?; Policy Responses to Increase the Pace of Economic Recovery: The Case for More Fiscal Stimulus; The Case Against More Fiscal Stimulus; The Case Against More Monetary Stimulus; Economic Projections. This is a print on demand edition of an important, hard-to-find publication.

This report examines the relationship between economic growth and the unemployment rate to anticipate possible future developments.

This book examines the reasons for the unprecedented weak recovery following the recent US recession and explores the possibility that government economic policy is the problem. Drawing on empirical research that looks at issues from policy uncertainty to increased regulation, the volume offers a broad-based assessment of how government policies are slowing economic growth and provides a framework for understanding how those policies should change to restore prosperity in America.

The recession that began in late 2007 was long and deep. It is likely to prove to be the worst economic contraction since the 1930s (but still much less severe than the Great Depression). The slowdown of economic activity was moderate through the first half of 2008, but at that point the weakening economy was overtaken by a major financial crisis that would exacerbate the economic weakness and accelerate the decline. Recent evidence suggests that the process of economic recovery has begun. Real gross domestic product (GDP) has been on a positive track since mid-2009. The stock market has recovered from its lows, and employment has increased moderately. On the other hand, significant economic weakness remains evident, particularly in the labor and housing markets. In the typical post-war business cycle, lower than normal growth during the recession is quickly followed by a recovery period with above normal growth. This above normal growth serves to speed up the reentry of the unemployed to the workforce. Once the economy reaches potential output (and full employment), growth returns to its normal growth path where the pace of aggregate spending advances in step with the pace of aggregate supply.