In the fall of 2008 the U.S. and other major economies were in a free fall in the wake of a global financial crisis.  Emergency stimulus policies here and around the world broke the fall, but brought us only part way to full recovery.

Today there is a grave danger that the still-fragile economic recovery will be undercut by austerity economics. A turn by major governments away from the promotion of growth and jobs and to premature focus on deficit reduction could slow growth and increase unemployment – and could push us back into recession.

History suggests that a tenuous recovery is no time to practice austerity.  In the Great Depression, Franklin Roosevelt’s New Deal generated growth and reduced the unemployment rate from 25 percent in 1932 to less than 10 percent in 1937.  However, the deficit hawks of that era persuaded President Roosevelt to reverse course prematurely and move toward budget balance.  The result was a severe recession that caused the economy to contract sharply and sent the unemployment rate soaring. Only the much larger wartime spending of the early 1940s produced a full recovery.

Today, the economy is growing only weakly.  7.8 million jobs have been lost in the recession.  Consumers, having suffered losses in home values and retirement savings, are tightening their belts.  The business sector, uncertain about consumer spending, is reluctant to invest in expansion or job creation, leaving the economy trapped on a path of slow growth or stagnation.  Over 20 million American workers are now unemployed, underemployed or simply have given up looking for a job.

The President and Congress should redouble efforts to create jobs and send aid to the states whose budget crises threaten recovery by forcing them to lay off school teachers, public safety workers, and other essential workers.  It also makes sense to invest in public service jobs – and in infrastructure projects for transportation, water, and energy conservation that will make our economy more productive for years to come.

See the full statement by 300 economists and other resources at dontkilljobs.org.

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