Research: Fed Policy and US Policy Responses

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Fed Policy and US Policy Responses

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

US Policy Responses to Labor Market Distress

  • High unemployment can draw comparison to Great Depression.
  • But swift policy initiatives now contrast with initial hesitation in 1930s.
  • New fiscal spending may focus on getting people back to work.
  • Even with massive policy support, rebuilding could be gradual.
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Fed Policy Responses

  • Fed acted swiftly to inject liquidity into the financial system.
  • Numerous banks failed due to Fed inaction in 1930s meltdown.
  • Fed is using 2008 playbook to mitigate impact of COVID-19.
  • Budget deficit is set to widen to $4 trillion by end of 2021.
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