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The Slow Recovery in Output after 2009


  • Robert Hall

    (Stanford University)

  • Mark Watson

    (Princeton University)

  • James Stock


  • John Fernald

    (FRB San Francisco)


The U.S. economy has been expanding slowly since the recession trough in 2009. Though unemployment has declined at about the same rate as in previous recoveries, output has grown much more slowly than in the past. We explore explanations for the shortfall in output growth, using a quantitative decomposition based on growth economics. Two components of the decomposition stand out: slow growth in productivity, and a growing shortfall of labor-force participation relative to its demographic determinants. The slow growth in both components predated the recession. Our analysis gives a full treatment to cyclical effects. Our conclusion is that powerful non-cyclical forces at least partially unrelated to the financial crisis of 2008 account for the poor record of output growth during the ongoing recovery from the crisis-induced recession. This combination of the adverse cyclical influence, and the noncyclical forces we study, resulted in a shortfall of capital formation that holds back output even today.

Suggested Citation

  • Robert Hall & Mark Watson & James Stock & John Fernald, 2017. "The Slow Recovery in Output after 2009," 2017 Meeting Papers 610, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:610

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