The 18-month U.S. recession that ended in June 2009 has so far cost more than $7,300, or about $175 a month, per person in lost consumption, said a researcher at the Federal Reserve Bank of San Francisco.
The $7,300 figure reflects the period from December 2007 to May 2011, and was calculated by comparing the path of real personal consumption expenditures to pre-crisis levels, senior economist Kevin Lansing wrote in a paper released today. Per capita consumption is still 1.6 percent below its pre-recession peak, he said
“The extensive harm of this episode raises the question of whether policy makers could have done more to avoid the crisis,” Lansing said in the paper.
Fed officials are attempting to avert a repeat of the crisis that began with the collapse of the subprime-mortgage market. Using interest-rate policy to burst asset bubbles “may have a distinct advantage” over regulatory actions because “central bankers can deploy it against bubbles regardless of the regulatory environment,” Lansing said.
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