South By North Strategies, Ltd.

In recent testimony before the Budget Committee of the U.S. House of Representatives, Mark Zandi of Moody’s Analytics summarized current economic conditions.

This dramatic turnaround is largely due to the aggressive and unprecedented response of monetary and fiscal policy. The Federal Reserve Board has implemented an effective zero interest rate policy and made a wide range of efforts to support the flow of credit throughout the financial system …. And under both the Bush and Obama administrations, Congress passed a series of fiscal stimulus efforts ranging from expanded benefits for unemployed workers to aid for state and local governments to tax cuts for businesses and households. While the effectiveness of any individual aspect of the policy response can be debated, there is no question that the overall policy response has been very successful.
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Despite the enormous economic progress, the economy is not yet out of the woods. Unemployment is stuck near double digits, and the current rate of job growth is barely sufficient to forestall further increases in unemployment as population and the labor force grow. Though stock prices have rallied and house prices are more stable, household nest eggs have been significantly diminished. Confidence also remains fragile: Consumers and small businesses feel better than they did a year ago but no better than in the depths of past recessions. The recovery thus remains vulnerable if anything further goes wrong, and there is plenty to be nervous about ….