A key recession warning flashed in the US last month, renewing concerns about the limitations Washington could face in the event of a downturn.
With already-low interest rates, the Federal Reserve may have less room than usual to bolster the economy.
"There are certainly some automatic stabilizers that would kick in like food stamps and Medicaid," said Austan Goolsbee, who served as the chairman of the White House Council of Economic Advisers following the 2008 financial crisis."But given that the rest of the world is slowing, too, it seems that policy to fight a recession would be a weaker brew than we might normally hope for."against a backdrop of weaker growth around the globe.
"While monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rule book for international trade," Fed Chairman Jay Powell said at an annual economic policy symposium in Jackson, Wyoming this August.The policy-setting Federal Open Market Committee has become divided over whether another rate cut would be appropriate in September.
When the US enters the next recession, debt relative to the size of the economy will be twice as high as in 2008, according to Maya MacGuineas, the president of the Committee for a Responsible Federal Budget.
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