Federal Reserve Bank of San Francisco

There Is Only One Way Out of the Recession
August 26, 2010

Average Americans are noticing what wise economists have been arguing for quite some time: Bubble-driven economic downturns differ qualitatively from standard business-cycle recessions. Not only do they go deeper; GDP takes longer to rebound, and job creation proceeds more slowly. The mechanism is straightforward. As the value of assets used as collateral collapses, so does borrowing. This depresses consumption, and the real economy dips, making it much harder for businesses and households to service the debts incurred during boom times.

One in Ten Have No Job. More Have No Security.
July 22, 2010

You may not be familiar with Mollie Orshansky. But you’re probably familiar with her work. Orshansky was a researcher and statistician who joined the Social Security Administration in the late 1950s. One of her jobs was to measure income adequacy and, in the early 1960s, she devised a formula based roughly on three times the price of a basic, nutritionally sufficient diet. It was a crude formula, based on previous research showing that people spent roughly a third of after-tax income on food. But it was good enough.