What to Do When the Next Recession Hits

Recessions Require Bold, Immediate Government Action

What lessons can progressive policymakers glean from past recession responses?

In a new brief, Zehra Khan of the Economic Fellows Project examines the federal government’s responses to the three major economic downturns of the 21st century: the 2001 recession, the 2008 financial crisis, and the 2020–21 COVID crisis. She concludes that the tax cuts of 2001 and 2003 and the limited stimulus of 2009 were largely insufficient for economic recovery.

By contrast: “The last major downturn, induced by the COVID-19 pandemic, was met with a recovery that proved to be the fastest since World War II. That success was no accident,” Khan writes. “It showed us that when policymakers act boldly—with rapid fiscal relief, expansive monetary policy, and targeted support for workers and families—the economy can recover quickly and broadly. Policymakers should use those lessons, including what they’ve learned about inflation risks, as a starting point for any future recession responses.”

She names the following priorities for a future recession response:

• direct, robust stimulus for families
• direct and flexible aid for state and local governments
• experimentation with economic policy: testing new financing models to reshape markets like housing, or tackling excessive corporate power structures that have inflated prices, suppressed wages, and stifled innovation

Above all, she emphasizes that, whenever the next recession comes, “policymakers have the tools and the knowledge to respond swiftly and effectively.”

Read the brief: “How Should Progressives Respond to the Next Recession?”

When Your Landlord Is Private Equity

As Roosevelt President and CEO Elizabeth Wilkins learned on her recent trip to Michigan, Detroit renters are feeling the consequences of a fatal mix of private equity, housing, and crypto.

Roosevelt Board Member and Detroit resident Keyontay Humphries explained the story: The private equity real estate company RealToken has been converting rental homes into crypto “tokens,” promising investors guaranteed high returns. The city alleges that RealToken then became an absentee landlord, collecting rent without properly maintaining the properties.

But the city has been fighting back, in a broader effort to hold unscrupulous corporations accountable and treat housing as a public good.

Read the post: “Detroit’s Fight Against Housing Greed” by Brad Lipton

What We’re Talking About

What We’re Reading

• On the clean energy transition: Politico reported on the Biden-era electric vehicle investments that have proven surprisingly durable this year.
  • For more on electric vehicles, see “Where Washington Fails, States Must Step Up to Protect Good American Jobs” by former Department of Energy official Betony Jones.
• On housing: The American Economic Liberties Project put out an exhaustive report on the problems plaguing the housing market—namely, the decline of local financing and the rise of shareholder primacy.
  • For more on shareholder primacy, see “The Myth That Shareholders Are Always Investors: Challenging the Paradigm of Shareholder Primacy” by Roosevelt’s Lenore Palladino and Harrison Karlewicz.
• On jobs: Roosevelt Principal Economist Michael Madowitz spoke with Business Insider about the sluggish job market. “The most visible part of this low-hire, low-fire job market is entry level workers being like, ‘Oh my God, I’ve done 5,000 interviews and all I got is this lousy T-shirt,’” he said. “But the other, smaller violin is people who were job-hopping to get raises for the last few years who just can’t do that. That’s actually neither great for them nor for their employers.”
  • For more on employment numbers, see Madowitz’s Jobs Day coverage on Bluesky.