The Bailouts Worked

A new study by economists Mark Zandi and Alan Blinder says the U.S. economic stimulus averted a worse downturn, says The Guardian. Conservatives maintain the spending was ineffective. “Using historical statistical relationships and a focus on the government’s impact on narrowing credit spreads, the pair found that the downturn would have continued into 2011, with unemployment peaking at 16.5% rather than last year’s actual high of 10.1%. They believe U.S. gross domestic product would have slumped by 7.4% in 2009 and by 3.7% in 2010, producing a “peak to trough” decline of 12%, rather than the anticipated 4%. Starved of demand, shops and employers would be cutting prices and wages.”