CAP Senior Fellow Christian E. Weller testifies before the Joint Revenue Hearing, House and Senate Ways and Means Committees, at the Massachusetts State House in Boston, Massachusetts. Read the full testimony (CAP Action)
The U.S. economy is in the fourth year of a recovery that started in June 2009. The fact that the economy is in recovery, even modestly, is something of a miracle given how stacked the deck is against it.
This is absolutely unique in American economic history:
- There has never been a recovery without the housing market expanding substantially as well.
- There has never been a recovery with state and local governments shrinking for three years in a row.
- There has never been a recovery with households owing, on average, well more than 100 percent of their after-tax income in debt.
Yet even with all three of these dogging us, we have avoided slipping back into recession.
And that is not all. Exports, which are a key factor contributing to strong growth and have offered a boost to many a recovery, have been battling the headwinds of the European financial crisis, slowing growth in China and India, and a strengthening dollar, which makes U.S. exports more expensive in the world market. And oil prices swung widely during those three years, from June 2009 to June 2012, as a result of dramatic international events such as the Arab Spring.
Much of this resilient recovery can be traced to past policy choices President Barack Obama and Congress made to specifically focus attention on investments that helped manufacturing and commercial construction, on help to struggling states and localities, and on middle-class tax cuts that boosted consumption. Targeted federal policies strengthened the private sector where possible. This meant attention to the struggling manufacturing and construction sectors through the American Recovery and Reinvestment Act of 2009. It meant support for the struggling construction sector through infrastructure investments in the Recovery Act and subsequent legislation. And it meant strengthening household after-tax income to reduce household debt burdens more quickly through increased unemployment insurance benefits, the Making Work Pay tax credit, added Social Security benefits, and a payroll tax holiday—all measures targeted toward boosting middle-class incomes, where debt burdens were highest.
CAP Senior Fellow Christian E. Weller testifies before the Joint Revenue Hearing, House and Senate Ways and Means Committees, at the Massachusetts State House in Boston, Massachusetts. Read the full testimony (CAP Action)