When no one buys what you produce, you lose your job (or, if you own the company, your business). The U.S. economy has suffered millions of job losses because we are not spending enough to keep everyone in their jobs. Look at Table B-1 of the BLS monthly jobs report and it’s clear: every industry other than health care has lost jobs in the last year.
So in a sense, the solution is clear: more spending. Lots more spending. More spending for goods & services will put people back to work. Buy a new house (construction workers get work. So do … More >
Economic policy is full of challenging decisions where the right answer is unclear. It is fortunate, then, that the tragedy of our current economic conditions makes one policy response very clear: We must help state and local governments maintain the spending they had planned a year ago.
Right now almost all of the state governors are cutting spending and/or raising taxes in an effort to close their state budget gaps. The result of these dozens of little Hoovers — and of the hundreds of mayors who are following similar policies — is predictable and disastrous. Just when the economy needs more … More >