The U.S. Isn’t Prepared for the Next Recession

A recession might seem like a distant concern, with the latest data showing that the current, extraordinarily economic long expansion just keeps humming along. But one will hit eventually, for some reason or another—that’s how economies work. And when it does, the country won’t be ready.

…

Then, there is the weakness in the unemployment-insurance system, a major bulwark against any contraction in the economy, whether regional or national, since it immediately helps pay the bills of workers who were laid off. Since the last recession, numerous states have cut back on the duration and the size of benefits that recipients who pay into the system and lose their job receive. From the late 1960s through the Great Recession, every state had a maximum benefit duration of at least 26 weeks, said George Wentworth of the National Employment Law Project, a nonprofit research and advocacy group. Now, nine states offer fewer than that, with Florida offering just 12 in some cases.

“The point here is that the system’s effectiveness as an economic stabilizer has really been undermined by a lot of program cuts that have happened since 2011, mostly in response to the solvency problems that the last recession created,” said Wentworth. “Right now, one in four unemployed workers are receiving benefits. There are 15 states out there where the share of workers is less than one in five. In the southeast, the cuts have been so deep there’s barely an unemployment-insurance program there.” In the event of another recession, without strong and swift federal and state intervention, many Americans would face far less help from unemployment insurance than they did last time around, he said.

…

In terms of global circumstances, political will, and fiscal and monetary firepower, then, the next recession seems in some ways more difficult to fight than the last. That need not mean that it would be worse than the Great Recession, of course. But it does mean that it will be worse than necessary.

Read the full article in The Atlantic.