The U.S. is paying a big price in growth, jobs and wages by practicing the kind of fiscal austerity that it criticizes European nations for pursuing.
If federal, state and local governments were cutting taxes, increasing spending and expanding hiring as they did during all but one recovery since World War II, the economy would be growing 3 percent a year rather than slightly over 2 percent, the average of the past six years, according to a Bloomberg analysis of data.
Some 2.4 million more Americans would be employed, helping to push up lagging wages, the analysis estimates.
“There’s really nothing in the postwar that compares with the current expansion,” said Brookings Institution economist Barry Bosworth. “We threw in the towel on fiscal stimulus way too soon.”