Last summer, the Economic Policy Institute warned that the U.S. economy could go into recession and, in meetings with Congressional staffers, called for consideration of an economic stimulus package. It took the release of alarming unemployment numbers in early January, however, to prompt action from Congress and the White House.
Since then, EPI has been proposing a package that will soften the blow of a slumping jobs market, rising energy costs, and crashing home values.
On January 11, EPI released a comprehensive plan that would combine stimulus payments to low- and middle-income workers, an extension of unemployment benefits, relief to states to offset tax increases and service cuts, and quick government spending on needed repairs to schools, bridges, and other public infrastructure.
EPI's Larry Mishel, Ross Eisenbrey, and John Irons called for a package totaling at least $140 billion or 1% of gross domestic product that would take effect immediately—a larger and more-decisive response than what others were proposing at the time.
The same week, Mishel testified to the Joint Economic Committee, explaining why the multi-pronged approach would get the most "bang for the buck" in terms of jump-starting the economy. He also emphasized that the policy focus needs to be on mitigating the expected rise in unemployment in 2008 and 2009 and the accompanying widespread loss of family income.
Within a few weeks, the House of Representatives and the White House announced a compromise deal that got it half-right. The size was on target, and the deal included payments of $300 to $1,200 to low- and middle-income individuals and families. But other key ingredients were missing. Worse, the plan included tax breaks to businesses that would have little if any real impact on the recession.
This page presents the writings of EPI experts on the economic situation and the appropriate policy responses.
Strategy for an economic rebound
Because the United States is either already in a recession or is headed for one, policy makers need to act now to craft an effective economic stimulus package to spur growth and job creation. Without a stimulus of sufficient magnitude, the U.S. economy is likely to see a decline in growth or even a formal recession, leading to higher unemployment, declining or stagnant wages, and a host of other economic problems. A package that provides $140 billion of stimulus—1% of GDP—would begin to reverse our economic course by creating an additional 1.4 to 1.7 million jobs. EPI unveils a broad-based, three-part prescription for stimulating the economy in its new Briefing Paper, Strategy for Economic Rebound—Smart Stimulus to Counter the Economic Slowdown.
Since When Is 0.6% Growth Good News?
For analysis of the latest gross domestic product (GDP) data from the Commerce Department, see EPI's GDP Picture.
Reading the vital signs in the jobs report
The Bureau of Labor Statistics release of its jobs report on Friday, April 4, provides an important set of labor market vital signs, which are key indicators of our overall economic health and the living standards of the vast majority of working families who rely primarily on wage income. This new EPI issue brief outlines some of the most important indicators and benchmarks from the monthly jobs report, what they mean for families' economic well-being in the current downturn, and the longer-term trends that give them context. Also be sure to check EPI's Jobs Picture for our full analysis of the jobs data for March.
Long-term unemployment bad enough to warrant action
The White House has demanded that legislators not extend unemployment benefits as part of the upcoming economic stimulus package, despite the fact that the latest jobs report from the Department of Labor shows that long-term unemployment is already a problem. For a clear understanding of the how the present situations compares to the past and what can reasonably be expected by the end of the year, read this special Economic Snapshot.
Not-so-super Tuesday for state labor markets
Feb. 5 will be the first coast-to-coast election since the nation's recent economic troubles became front page news. To see how the 24 "Super Tuesday" states are faring over recent months in terms of unemployment rates, health care coverage, pension rates, and other important economic indicators, read EPI's new Issue Brief.
Extending unemployment benefits stimulates economy, helps workers
If the economic stimulus package that Congress eventually passes fails to extend the eligibility period of unemployment compensation, 1.2 million workers will be left out in the cold. This week's Economic Snapshot looks at the plight of the long-term unemployed in a weakening labor market.
EPI on stimulus deal reached by White House and Congress
With news media reporting that the administration and Congress have reached agreement on an economic stimulus package, Economic Policy Institute President Lawrence Mishel issued a statement sharply critical of the contents of that deal.
Bush tax rebate: not effective, not fair
With an economic slowdown looming, the Bush administration has proposed a $100 billion tax rebate as part of an overall stimulus package for the slowing U.S. economy. But 70% of the rebate would go to the top 40% of earners and would exclude most low-income families, who are most in need and most likely to spend the money immediately. This Economic Snapshot examines the flawed proposal.
Warnings of steep increase in black unemployment
As the nation prepares to commemorate Martin Luther King Day, data indicate a national economic recession would result in disproportionately high unemployment rates for African Americans as compared to white Americans. In a new Issue Brief, EPI closely examines What a recession means for black America.
Letter to Congressional leaders urging new legislation to extend unemployment insurance (UI) benefits
This January 15, 2008 letter was co-signed by:
AFL-CIO,
American Federation of State, County and Municipal Employees,
Coalition on Human Needs,
Economic Policy Institute,
International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers (Ironworkers),
International Association of Machinists,
The International Brotherhood of Teamsters,
International Union, United Automobile, Aerospace & Agricultural Workers of America (UAW),
Leadership Conference on Civil Rights,
National Employment Law Project,
National Women’s Law Center,
Service Employees International Union,
The United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry (Plumbers), and
UNITE-HERE.
Real wages decline in 2007
Both hourly and weekly earnings fell in 2007, a sharp reversal from the gains in 2006. For details on last year's decline in wages and the trend over the past few years, read EPI's new Issue Brief.
