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Needed: Plan B On The Economy

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"Needed: Plan B On The Economy"

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David Leonhardt warns that “for the second straight year, the recovery seems to be at risk of stalling” and in response policymakers are mostly just giving us optimism:

White House advisers and Ben Bernanke, the Federal Reserve chairman, argue that the bad news is a merely a blip caused by bad weather, a temporary cut in military purchases and other one-time factors. They may be right, too. Stock market investors certainly share their optimism: the Standard & Poor’s 500 index is near a postrecession high. But both Wall Street and Washington were also optimistic around this time last yeartoo optimistic. The unfortunate truth is that the recoveries from financial crises have a habit of disappointing.

As he says, what’s needed is a “Plan B.” Maybe the optimists will be proven right, but maybe they won’t be. And one way to bolster optimism would be to reassure people that policymakers have both tools and plans at their disposal to bolster growth if we hit a snag.

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