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The Recovery From The Great Recession: A Long, Evolving Expansion


  • Jay C. Shambaugh
  • Michael R. Strain


Prior to 2020, the Great Recession was the most important macroeconomic shock to the United States economy in generations. Millions lost jobs and homes. At its peak, one in ten workers who wanted a job could not find one. On an annual basis, the economy contracted by more than it had since the Great Depression. A slow and steady recovery followed the Great Recession's official end in the summer of 2009, but because it was slow and the depth of the recession so deep, it took years to reduce slack in labor markets. But because the slow-and-steady recovery lasted so long, many pre-recession peaks were exceeded, and eventually real wage growth began to accumulate for workers across the distribution. In fact, the business cycle (including recession and recovery) beginning in December 2007 was one of the better periods of real wage growth in many decades, with the bulk of that coming in the last years of the recovery. We place the Great Recession in historical context and trace the path of the recovery, studying its different phases and how different groups of workers were impacted in each phase. We also discuss the response of fiscal and monetary policy to the Great Recession, and draw lessons for the future.

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  • Jay C. Shambaugh & Michael R. Strain, 2021. "The Recovery From The Great Recession: A Long, Evolving Expansion," NBER Working Papers 28452, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:28452
    Note: IFM ME

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    Cited by:

    1. Leila Bengali & Mary C. Daly & Olivia Lofton & Robert G. Valletta, 2021. "The Economic Status of People with Disabilities and Their Families since the Great Recession," The ANNALS of the American Academy of Political and Social Science, , vol. 695(1), pages 123-142, May.
    2. Erica L. Groshen & Harry J. Holzer, 2021. "Labor Market Trends and Outcomes: What Has Changed since the Great Recession?," The ANNALS of the American Academy of Political and Social Science, , vol. 695(1), pages 49-69, May.
    3. de Moraes, Claudio Oliveira & Cruz, Guilherme, 2023. "What do we know about the relationship between banks and income inequality? Empirical evidence for emerging and low-income countries," Journal of Economics and Business, Elsevier, vol. 123(C).
    4. Haapanala, Henri & Marx, Ive & Parolin, Zachary, 2022. "Decent Wage Floors in Europe: Does the Minimum Wage Directive Get It Right?," IZA Discussion Papers 15660, Institute of Labor Economics (IZA).
    5. David Autor & Arindrajit Dube & Annie McGrew, 2023. "The Unexpected Compression: Competition at Work in the Low Wage Labor Market," NBER Working Papers 31010, National Bureau of Economic Research, Inc.
    6. Richard V. Burkhauser & Kevin Corinth & Douglas Holtz-Eakin, 2021. "Policies to Help the Working Class in the Aftermath of COVID-19: Lessons from the Great Recession," The ANNALS of the American Academy of Political and Social Science, , vol. 695(1), pages 314-330, May.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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