"So Blinder and Zandi used the Moody's model to simulate how the economy would've looked if no special measures had been taken in the wake of the financial crisis and recession. They assume that the government's 'automatic stabilizers' — programs like food stamps and progressive taxes that help people more when the economy's suffering — took effect, and that the Federal Reserve took interest rates down to zero. They then compared the economy in that counterfactual to the actual history.
- The recession would have lasted twice as long.
- The economy would have shrunk by nearly 14 percent, not 4 percent.
- Unemployment would have peaked at nearly 16 percent, not 10 percent.
- More than 17 million jobs would have been lost, around twice the actual number.
- In 2015, there would still be 3.6 million fewer jobs and 7.6 percent unemployment.
They did better than that, though. They also modeled the contribution of each individual policy:
- The 2009 stimulus package cut unemployment by 1.4 points and increased GDP by 3.3 percent in 2010.
- The Fed's quantitative easing added 1.1 percent to GDP and cut unemployment by 0.6 points in 2012.
- The bank bailouts — specifically the TARP program and the Fed's 'stress tests' — cut unemployment in 2011 by 2.2 points and increased GDP by 4.2 percent.
- The auto bailout cut unemployment by 0.4 points and increased GDP by 1 percent in 2010."