11

The Fiscal Situation, Economic Recovery and the Labor Market

Edward P. Lazear

2

Net Lending

2

23.8

-219.1

-458.9

-68.8

149.6

659.7

-$600

-$400

-$200

$0

$200

$400

$600

$800

1996 2003 2006

Advanced Economies

Developing Economies

US$ Billion

Source: U.S. Census Bureau, Seasonally Adjusted Annual Rate

3

Foreign Holdings Of ABS

3

4

Bond Spreads

4

Source: Moody's; Merrill Lynch; U.S. Treasury Department

0

200

400

600

800

1000

1200

1400

1600

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

BAA

Junk

AAA

55Source: U.S. Census Bureau, Seasonally Adjusted Annual Rate

66Source: Federal Housing and Finance Authority; Standard and Poor’s, Seasonally Adjusted Annual Rate

77

Target and Effective Fed Funds Rate

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

LIBOR Effective Federal Funds Rate Target Federal Funds Rate

8

Cash For Clunkers: Just Moving Sales Up in Time

8

Auto Sales

46,000

48,000

50,000

52,000

54,000

56,000

58,000A

pr-2

009

May

-200

9

Jun-

2009

Jul-

2009

Aug

-200

9

Sep-

2009

Oct

-200

9

Nov

-200

9

Dec

-200

9

Mill

ions

of D

olla

rs

99

Monthly Unemployment Rates : France, Germany, Italy, UK, and US(Seasonally Adjusted)

10

Most Optimistic View of US Stimulus

10

1111

Growth in the US Public Debt

12

Productivity Slowdown In Singapore? Recession Effect Only

Labor Productivity Growth

-10.0

-5.0

0.0

5.0

10.0

15.0

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

Pe

rce

nt

Labour Productivity Growth 3 year moving average of productivity growth

13Source: Singapore Department of Statistics and Manpower Research & Statistics Department, Ministry of Manpower