The economy’s current two-speed recovery is leaving behind more job sectors while waiting for fiscal stimulus from Congress, U of R economist says.

“I would emphasize three things about the present state (and future) of the economy,” says University of Redlands Economist Nathaniel Cline.

“First, the ‘low hanging fruit’ of recovery is picked. That is, simply lifting restrictions (if it were even safe to do) will not lead to accelerated recovery. The problem is that with the expiration of income support programs, actual spending in the economy has fallen (including state and local government spending) which of course reduces incomes further. This downward spiral is what macroeconomists call the ‘multiplier’ effect.

“Further recovery absolutely requires further stimulus at this point. The unemployment insurance expansions were wildly successful and should be restored. State and local budgets need federal support to avoid cuts to essential services, but also to avoid being a drag on spending recovery. We should not forget that the slow growth after 2008 was in no small part due to state and local government austerity,” Cline says.

“The second point is that we are indeed experiencing a two-speed recovery as many people have pointed out, but there are some unique features as compared to previous recoveries. In particular, we are not seeing parents of children return to work, and service sectors like education and health (which are usually resilient) are shedding jobs. So in addition to the usual two-speed recovery (in which workers from minority groups and low-income workers fall behind), we are leaving behind teachers and nurses.

“Point three, going forward, the speed of the recovery is, as always, a policy choice. We know that we need more (and massive) fiscal stimulus from Congress. Economists are speaking in essentially one voice on this issue. The real question is whether politicians will deliver.”

Dr. Nathaniel Cline can speak to a broad scope of economic topics, including the debate over unemployment compensation, the recession, and the healthcare vs. economy debate. He holds a Ph.D. in economics and is a recognized expert on economic history, the U.S. and international macroeconomics, Bitcoin, Brexit, and international finance.