Various people have been lamenting the various forecasts indicating that it will take five or six years to get back to a decent jobs situation, but Ryan Avent points out that the news may be even worse than that as it wouldn’t be historically unusually for a new downturn to occur faster than that timeframe indicates.
Which is all the more reason it’s important for policymakers to be doing more to bolster growth. With rapid growth and re-employment, it’s possible to make progress on the medium-term fiscal situation. With rapid growth and re-employment, it’s possible to get nominal interest rates up above zero before the time comes to cut them again. With rapid growth and re-employment, people will have a chance to pay down some of their debts and have more of a cushion before the next recession. But if we stagnate, we’ll continue to be exceedingly vulnerable to any kind of negative shocks.