Can the U.S. Economy Recover from the Current Slump ?

The official unemployment rate in September stood at 9.6%. The total number of unemployed persons was 14.8 million.  The number of long-term unemployed (27 weeks and more) stood at 6.1 million. Billions of dollars in bailouts have saved the large banks and the economy from complete collapse but the $14.5 U.S. economy is unable to recover strongly.

The unemployment rate is stubbornly high compared to previous recessions. The following graphic from a Bloomberg BusinessWeek report illustrates the uniqueness of the current economic downturn:

Click to Enlarge

Source: The U.S. Economy: Stuck in Neutral, Bloomberg BusinessWeek

From the report:

“Complicating matters, the hole from which the U.S. economy needs to escape is unusually deep. As the accompanying chart shows, employment in September remained 5.6 percent below its December 2007 peak. In four of the five previous recessions going back to 1970, employment had bounced back to new highs by this stage. The only exception was the aftermath of the 2001 recession, in which employment was 1.8 percent below its pre-recession peak at this stage.”

Most people would agree that the economy will eventually recover.However in order to  stimulate demand and pull the economy out of the current slump, unusual and bold policy measures are needed.


  1. I would like to know what unusual and bold policy measures the author believes may start moving us in the right direction. I have a small business that consumes all my time, and would like to see more policy decisions aimed at helping small business in this country put people to work. We have seen a stimulus package that{correct me if I’m wrong}was going to create jobs, but now appears to have just compensated those who helped elect the current administration. I ask this question about what measures, because I have no clue other than creating jobs through small business.
    Thank You

  2. Andy
    Thanks for your comment.Sorry for the delay in my reply.

    You ask a very good question.I am not an economic expert by any means but I have studies economics.In my opinion the stimulus packages implemented so far have not helped small businesses and creation of jobs.Some of the measures that I think the administration can consider include tax incentives for small businesses (better than what they have already passed), some kind of way policy changes that will make US products attractive in foreign markets driving exports and helping small and medium businesses with favorable financing options, etc.


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