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The Disappointing Recovery of Output after 2009

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  • John G. Fernald
  • Robert E. Hall
  • James H. Stock
  • Mark W. Watson

Abstract

U.S. output has expanded only slowly since the recession trough in 2009, even though the unemployment rate has essentially returned to a pre-crisis, normal level. We use a growth-accounting decomposition to explore explanations for the output shortfall, giving full treatment to cyclical effects that, given the depth of the recession, should have implied unusually fast growth. We find that the growth shortfall has almost entirely reflected two factors: the slow growth of total factor productivity, and the decline in labor force participation. Both factors reflect powerful adverse forces that are largely unrelated to the financial crisis and recession—and that were in play before the recession.

Suggested Citation

  • John G. Fernald & Robert E. Hall & James H. Stock & Mark W. Watson, 2017. "The Disappointing Recovery of Output after 2009," NBER Working Papers 23543, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23543
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    Cited by:

    1. Foerster, Andrew & Hornstein, Andreas & Sarte, Pierre-Daniel G. & Watson, Mark W., 2019. "Aggregate Implications of Changing Sectoral Trends," Working Paper 19-11, Federal Reserve Bank of Richmond.
    2. Matias Covarrubias & Germán Gutiérrez & Thomas Philippon, 2019. "From Good to Bad Concentration? U.S. Industries over the Past 30 Years," NBER Chapters,in: NBER Macroeconomics Annual 2019, volume 34 National Bureau of Economic Research, Inc.
    3. Ioanna Bardaka & Ioannis Bournakis & Georgia Kaplanoglou, 2018. "Total factor productivity (TFP) and fiscal consolidation: how harmful is austerity?," Working Papers 255, Bank of Greece.
    4. Saroj Bhattarai & Choongryul Yang & Felipe Schwartzman, 2019. "The Persistent Employment E ffects of the 2006-09 U.S. Housing Wealth Collapse," 2019 Meeting Papers 671, Society for Economic Dynamics.
    5. repec:pal:buseco:v:52:y:2017:i:2:d:10.1057_s11369-017-0034-4 is not listed on IDEAS
    6. Francesco Manaresi & Nicola Pierri, 2018. "Credit supply and productivity growth," Temi di discussione (Economic working papers) 1168, Bank of Italy, Economic Research and International Relations Area.
    7. repec:sls:ipmsls:v:36:y:2019:7 is not listed on IDEAS
    8. Valerie Cerra & Sweta Chaman Saxena, 2017. "Booms, Crises, and Recoveries: A New Paradigm of the Business Cycle and its Policy Implications," IMF Working Papers 17/250, International Monetary Fund.
    9. repec:eee:exehis:v:69:y:2018:i:c:p:1-12 is not listed on IDEAS
    10. David Kiefer, Ivan Mendieta-Munoz, Codrina Rada, Rudiger von Arnim, 2019. "Secular Stagnation and Income Distribution Dynamics," Working Paper Series, Department of Economics, University of Utah 2019_05, University of Utah, Department of Economics.
    11. David Byrne & Stephen D. Oliner & Daniel E. Sichel, 2017. "Prices of high-tech products, mismeasurement, and the pace of innovation," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 52(2), pages 103-113, April.
    12. repec:eee:chieco:v:55:y:2019:i:c:p:1-18 is not listed on IDEAS
    13. Francesco Manaresi & Nicola Pierri, 2018. "Credit supply and productivity growth," BIS Working Papers 711, Bank for International Settlements.
    14. Francisco Perez-Arce & Maria J. Prados & Tarra Kohli, 2018. "The Decline in the U.S. Labor Force Participation Rate," Working Papers wp385, University of Michigan, Michigan Retirement Research Center.
    15. Harashima, Taiji, 2019. "A Pareto Inefficient Path to Steady State in Recession," MPRA Paper 93216, University Library of Munich, Germany.
    16. repec:eee:ecolet:v:176:y:2019:i:c:p:28-34 is not listed on IDEAS
    17. repec:eee:jmacro:v:54:y:2017:i:pa:p:110-126 is not listed on IDEAS

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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