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New Members of Congress December 4, 2008

New Members of Congress December 4, 2008. Jeffrey Frankel Harpel Professor of Capital Formation and Growth Harvard Kennedy School. SEASONALLY ADJUSTED. Employment peaked in Dec. 2007; since then we have lost almost 2 million jobs (12/5/08). Civilian labor force. Civilian employment.

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New Members of Congress December 4, 2008

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  1. New Members of CongressDecember 4, 2008 Jeffrey Frankel Harpel Professor of Capital Formation and Growth Harvard Kennedy School

  2. SEASONALLY ADJUSTED Employment peaked in Dec. 2007;since then we have lost almost 2 million jobs (12/5/08). Civilian labor force Civilian employment Payroll employment series Source: Bureau of Labor Statistics The unemployment rate rose to 6.8% in November (based on household survey). Unemployment rate

  3. On Dec. 1, the NBER Business Cycle Dating Committee announced that the recession had started December 2007. • This means that the recession is already • longer than 1990-91 & 2001 recessions (8 mos.) , • longer than average post-war recession (10 mos.) • Forecasts show no recovery before mid-2009 => Recession will be longer than any other post-war (16 months).

  4. Six-month Change in Payroll Employment at Annual Rate, September 1955 – November 2008

  5. Underestimated risk in financial mkts,incl. backward-looking option pricing Failures of corporate governance Incl. executive compensationrating agencies… Households saving too little, borrowing too much Federal budget deficits Monetary policy easy 2003-05 Excessive leverage in financial institutions Housing bubble Low national saving Stock market bubble Stock market crash Housing crash China’s growth Financial crisis 2007-08 Lower long-term econ.growth Eventual loss of US global hegemony Origins of the financial/economic crises Predatory lending Excessive complexity MBSs Foreigndebt CDSs CDOs Gulf insta-bility Oil price spike 2007-08 Recession 2008-09

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