One of the most important lessons from the Great Recession is that they should be prepared to do more. While the Great Recession measures were substantial and prevented an even more severe recession, they ended prematurely and were insufficient to promote a robust recovery.In March, lawmakers enacted three increasingly sizeable pieces of legislation to address the harm that the pandemic and efforts to contain it are causing. This experience generated renewed attention among policy economists to the importance of fiscal stimulus (temporary increases in government spending and reductions in government revenues) in supporting overall spending and employment when the economy weakens and preventing serious and long-lasting damage when recessions do occur. It left key lessons for policymakers, who should now use a wide array of available policy tools to keep this and future downturns as short and shallow as possible.Įconomists’ thinking about anti-recessionary policies has evolved in the last decade, informed in part by the limits of conventional monetary policy that fighting the Great Recession revealed. The last recession - the Great Recession - was a stark reminder of the need to lessen the human hardship and economic dislocation associated with a recession.
The economy was in the longest expansion on record before the COVID-19 pandemic, but a sharp decline in economic activity is now inevitable, with unemployment insurance claims skyrocketing and many forecasters saying that the economy has already entered a recession.
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