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MAY 1, 2019

Recession Ready

By: Heather Boushey, Ryan Nunn and Jay Shambaugh

Abstract

Economic recessions are inevitable and they are painful, with harsh short-term effects on families and businesses and potentially deep long-term impacts on the economy and society. But we can ameliorate some of the next recession’s worst effects and minimize its long-term costs if we adopt smart policies now that will be triggered when its first warning signs appear.

Equitable Growth has joined forces with The Hamilton Project (opens in a new tab) to advance a set of specific, evidence-based policy ideas for shortening and easing the impacts of the next recession. In a new book, Recession Ready: Fiscal Policies to Stabilize the American Economy (opens in a new tab), experts from academia and the policy community propose six big ideas, including two entirely new initiatives and four significant improvements to existing programs, all to be triggered when the economy shows clear, proven signs of heading into a recession. These proposals (see more on each below) aim to strengthen and add to our automatic stabilizers: policies that inject money into the economy in a downturn and withdraw stimulus when the economy is strong. Congress should consider these policy proposals now because when the next recession appears on the horizon, it may be too late.

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