While unemployment worsened in 2008, it wasn’t yet as severe as some other post World War II recessions. But the American Institute for Economic Research at MIT says the latest numbers are approaching those of a recession in 1961, according to the think tank’s Richard Ebeling.
“At that time the U.S. economy went into a recession due to a falling off of investment demand. Interest rates had risen because of some inflationary demands that had preceded that. There were also degrees of uncertainty in the market — a new president had recently taken office, of course, which was John F. Kennedy — question marks about what directions he would take his economic policies. He introduced a variety of tax cuts stimulus programs that got the economy out of that rather high level of unemployment beginning relatively quickly.”
Ebeling says surveys have tracked consumer confidence when economies have entered past recessions, but this one has the spotlight of 24-hour rolling news coverage.
“We are bombarded with news virtually every week about the deteriorating employment situation, the likelihood of a recovery in the housing market, and people are sort of holding back, or are reluctant to incur consumption expenditures as income earners, to undertake new investments from the business side, because they don’t know how long the downturn is going to continue before it sort of bottoms out and they feel safe to, job-wise or business-wise, to start spending money again. But overlaying that is also the degree of uncertainty that now faces us over what the government is going to do.”
Ebeling says questions remain about how much stimulus money is needed and where it will be spent, tax cuts and other questions about government policies that affect producers, consumers, employers and employees.
Ed Mayberry, KUHF Houston Public Radio News.