Technically, the last U.S. recession began in December 2007, but in the first few months of the downturn, the effects were fairly modest -- the economic contraction wasn't especially significant, and though the economy was losing jobs, the totals were nowhere near crisis levels.
But on Sept. 15, 2007 -- exactly seven years ago today -- Lehman Brothers collapsed, effectively lighting the match that started the Great Recession, the worst global economic crisis in generations. A great deal has happened in the years since, but seven years ago, conditions were genuinely terrifying. It wasn't long after Lehman's demise that a whole lot of Americans wanted to know when the economy would improve, how the economy would improve, and even whether the economy would improve.
Jason Furman, the chairman of the White House Council of Economic Advisers, wrote a persuasive piece
for the Huffington Post
today, noting that the response to the crisis from U.S. officials really did turn "a depression-like shock into a six-year expansion."
[T]he onset of the Great Recession was more severe across a wide range of measures than the Depression itself -- including substantially larger losses in wealth, a significantly larger contraction in global trade, and a comparable reduction in employment and private demand. In these ways the economy in late 2008 looked like it could have been on track for an outcome comparable to the Great Depression. But an aggressive public policy response from a wide range of actors promoted aggregate demand and helped rescue the financial system. Over the course of just a few months after taking office, President Obama worked to shore up the U.S. financial system, rescue the auto industry, and pass a Recovery Act and more than a dozen subsequent fiscal measures that provided vital support to families and businesses. Since the crisis, the President has taken continued steps -- including Wall Street reform -- to strengthen our economy and protect against future downturns. This decisive policy response helped the economy return to growth only six months after the President took office and made the United States among the first advanced economies to recover its pre-crisis output per capita. Today, those economic indicators that had collapsed in early 2009 have surged above pre-crisis levels and continue to improve.
I can appreciate why many Americans aren't yet satisfied with the domestic economy, and it's hardly controversial to argue that we're not yet where we'd like to be.
But on days like today, it's worth pausing to appreciate the fact that conditions like the ones we see today -- the fastest jobs growth since the 1990s, for example -- were simply unimaginable on Sept. 15, 2008. The very idea that we'd see an economy that created 8 million jobs in three years, pushing the unemployment rate from 10% to 5.1%, seemed like a fantasy amid catastrophes like the Lehman bankruptcy.
And yet, here we are. As the economy was falling off a cliff, congressional Republicans demanded a five-year spending freeze -- thanks again for the great advice, guys -- but thankfully, they were in the minority. Thanks to policies such the Recovery Act, the United States was able to turn the economy around faster than even most optimists predicted.
Of course, Lehman's collapse unfolded against the backdrop of a presidential campaign, and as we reflect on what's transpired in the years since, we find ourselves with an unexpected scenario: another presidential campaign, this time, with two prominent candidates who worked with ... wait for it ... Lehman brothers.
As we discussed
a few months ago, Ohio Gov. John Kasich (R), after he left Congress, went to work at Lehman Brothers. In fact, he was there in 2007 and 2008 -- an era that proved to be quite eventful.
Asked in June whether he has any regrets from his tenure at Lehman, the Republican presidential candidate responded as if the question were ridiculous. “Are you kidding? Regrets? I thought it was a fantastic time," Kasich said
Remember, he was a Lehman executive when the firm made the biggest bankruptcy filing in the history of the United States.
Of course, Kasich isn't alone. I'm reminded of this
recent Wall Street Journal
[Former Gov. Jeb Bush] signed on with Lehman after leaving the Florida governor’s mansion, making it clear he wanted work as a hands-on investment banker rather than hold a ceremonial role typically given ex-politicians. [...] For more than seven years, nearly the length of his two gubernatorial terms, Mr. Bush, a candidate for the Republican presidential nomination, spent as much as half of his working hours advising Lehman and later Barclays, which bought the collapsed investment bank’s U.S. business. He wasn’t an employee of the firms, said people familiar with the matter, but was paid to attend meetings, dinners and conferences where he spoke to clients and bank executives on such subjects as health care, education, immigration and energy -- matters he has started taking up this year with voters. Mr. Bush earned about $1.3 million a year at Lehman and some $2 million from Barclays, his campaign said.
Last December, when Mitt Romney was weighing another White House campaign, he privately predicted
that Bush "would run into problems because of his business dealings, his work with the investment banks Lehman Brothers and Barclays, and his private equity investments."
To date, Bush's and Kasich's Wall Street background hasn't generated a lot of attention in the presidential race. I'll be surprised if that doesn't change eventually, depending on their relative competitiveness.