A Comparative Study of the 2008 and 2020 US Recessions, Informing Today’s Economic Policies

Abstract

This research paper will first focus on the monetary and fiscal policies during the 2008 and 2020 recessions to understand consistencies between them and find lessons that can be learned. Using this analysis, the following question can be answered: How can lessons learned from the US response to the 2008 Global Financial Crisis and the 2020 COVID-19 pandemic inform policy decisions in the current inflationary period, with the goal of preventing a recession? Analyzing historical monetary and fiscal policies adopted during the 2008 and 2020 recessions, this paper seeks to unravel the patterns in government responses. By examining the economic landscape in July 2023, this paper will propose a comprehensive set of policy recommendations designed to mitigate the United States’ chances of a looming recession. Although there is no “one size fits all” approach to combating recessions, we can learn much from prior recessions to avoid an impending recession today. Using the 2008 and 2020 policy decisions as frameworks for how different government policies impact the economy, I have curated a recommended policy package to avoid a recession in the US today. For monetary policy, the Federal Reserve must stop raising interest rates and hint at future decreases. For fiscal policy, the federal government must strengthen banking regulations and forgive student loans. Together, these policies will improve consumer and investor confidence and stabilize the financial sector. This policy package will prevent a recession this year and place the U.S. economy in a healthier position to withstand future economic shocks.