At a debate among the Republican presidential candidates in March, U.S. Senator Ted Cruz of Texas boiled down his campaign message to its essentials: “Here’s my philosophy. The less government, the more freedom. The fewer bureaucrats, the more prosperity. And there are bureaucrats in Washington right now who are killing jobs and I’ll tell you, I know who they are. I will find them and I will fire them.”
Now, almost a decade after the Great Recession hit, the story of its origins and course has become familiar. It began in December 2007, soon after the U.S. housing bubble burst, triggering the widespread collapse of the U.S. financial system. Credit dried up, as banks lost confidence in the value of their assets and stopped lending to one another.
Today, there is essentially one accepted narrative of the economic crisis that began in late 2007. Overly optimistic homebuyers and reckless lenders in the United States created a housing price bubble. Regulators were asleep at the switch.
Jason Furman discusses long-term trends in labor force participation, especially among men in their prime working years; effects on the economic outlook of the United States; and policy options moving forward.
In the years since the global financial crisis of 2008 engulfed the world and the United States fell into the Great Recession, the panic has subsided and Western economies have recovered to varying degrees.
In every single region of the world, economic growth has failed to return to the rate it averaged before the Great Recession. Economists have come up with a variety of theories for why this recovery has been the weakest in postwar history, including high indebtedness, growing income inequality, and excess caution induced by the original debt crisis.
The two economic developments that have garnered the most attention in recent years are the concentration of massive wealth in the richest one percent of the world’s population and the tremendous, growth-driven decline in extreme poverty in the developing world, especially in China. But just as important has been the emergence of large middle classes in developing countries around the planet.
As China asserts itself in its nearby seas and Russia wages war in Syriaand Ukraine, it is easy to assume that Eurasia’s two great land powers are showing signs of newfound strength. But the opposite is true: increasingly, China and Russia flex their muscles not because they are powerful but because they are weak.
From Wall Street to K Street to Main Street, pessimism about the global economy has become commonplace. The world economy may have finally emerged from the financial crisis of 2008, but according to conventional wisdom, it remains fragile and unsteady, just one disruption away from yet another perilous downturn.
Despite China’s recent economic struggles, many economists and analysts argue that the country remains on course to overtake the United States and become the world’s leading economic power someday soon. Indeed, this has become a mainstream view—if not quite a consensus belief—on both sides of the Pacific.
Despite boasting the most powerful economy on earth, the United States too often reaches for the gun instead of the purse in its foreign policy. The country has hardly outgrown its need for military force, but over the past several decades, it has increasingly forgotten a tradition that stretches back to the nation’s founding: the use of economic instruments to accomplish geopolitical objectives, a practice we term “geoeconomics.”
According to a new McKinsey Global Institute (MGI) report, advancing women’s equality could add $12 trillion to GDP by 2025. This seminal report, entitled “The Power of Parity,” is the product of research from ninety-five countries on the relationship between gender parity and economic growth. Kweilin Ellingrud, a lead researcher on the report, and Christopher Ruhm, whose research examines the economic effects of work/family policies, joined the Women and Foreign Policy program for a discussion about the economic imperative of promoting gender equality. This roundtable was generously sponsored by the William and Flora Hewlett Foundation.
During the past century, economic inequality in the developed world has traced a massive U-shaped curve—starting high, curving downward, then curving sharply back up again. In 1915, the richest one percent of Americans earned roughly 18 percent of all national income. Their share plummeted in the 1930s and remained below ten percent through the 1970s, but by 2007, it had risen to 24 percent.
Just a few years ago, Latin America was on a roll. Its economies, riding on the back of the Chinese juggernaut, were flourishing. A boom in commodity prices and huge volumes of foreign direct investment in agriculture and natural resources generated a golden decade.
For the first time since the start of Britain’s referendum fight over Europe, the polls predict “Brexit.” The four most recent national surveys put the “Leave” side ahead with margins of between one and 10 percentage points. Most people, including many disaffected Britons who want to shake up the system by backing a Brexit, understand that this would mean a political and economic shock. But they underestimate its severity.
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