Austerity is not the answer...

Former CEA Chair Christina Romer on the notion that austerity, not stimulus, is the solution to current unemployment and economic stagnation:

This argument makes me crazy. There’s simply no evidence that concern about the current deficit is a significant factor limiting consumer spending or business investment. And government borrowing rates are at record lows, suggesting that financial markets are not worried about the deficit, either.

Moreover...the best evidence shows that fiscal austerity depresses growth and raises unemployment in the near term. That’s the experience of countries like Greece, Portugal and Britain, which have embarked on drastic deficit reduction plans over the last two years. Cut the current deficit and you will raise unemployment, not lower it.

Like many other countries, the United States has two terrible problems: a devastating lack of jobs right now and an unsustainable budget deficit over the longer run. The right question is not whether we can reduce unemployment by lowering the deficit (we can’t), but whether we can make progress on both problems.

With 14 million Americans unemployed and no prospect of rapid recovery on the horizon, we really have no choice: we must take additional measures to create jobs. What policy makers need to discuss is which measures will be most effective in putting people back to work, and in hastening the day when government support is no longer needed.

How bad is it?

Here's a chart from "Calculated Risk" that puts the current Great Recession in context of all of the post-WWII recessions the US has faced:

As you can see...it's pretty bad.  Far worse than anything since the Great Depression, as we now well know.  Small comfort, but via Ezra Klein there is this:  Even given the slow, staggering recovery and the prolonged unemployment, compared to big economic meltdowns that have hit comparable industrialized countries in recent decades, "the U.S. labor market has performed better than 4 of the previous Big 5 crises.”

Former President Bill Clinton put the Obama administration's performance managing the crisis in perspective last week: