Permanent and Transitory Effects of the 2008–09 Recession

Foerster, Andrew; Seitelman, Lily

Journal Article

Permanent and Transitory Effects of the 2008–09 Recession

Abstract: Separating U.S. economic output into permanent and transitory components can help explain the effects of recessions and expansions. GDP growth shifted to a lower trend rate in 2000, indicating a slowdown long before the 2008–09 recession. GDP was substantially above trend before that recession; it then declined significantly and did not recover to its trend rate until 2017. The recession resulted in permanent losses to GDP. Without those permanent effects, GDP at the end of the latest expansion would have been about $380 billion or $1,460 per person higher.

Keywords: Recessions;