>> My name is Bob Aukland [assumed spelling].
I'm an Associate Professor of Business and
Economics at Middlesex Community College,
the crown jewel of the community
college system here in Massachusetts.
My question for you, it's a follow-on
to that question you just answered.
The combination of monetary and fiscal
policies have helped to move the economy
in the right direction, yet growth
has remained stubbornly sluggish.
What do you see as the major
contributing reasons for this?
>> Well first, let me say one thing, which
is, I want to commend you for your work
in a community college, community colleges,
junior colleges, technical schools.
One of the great strengths of our educational
system is that we have so many diverse ways
for people to educate themselves,
to achieve skills.
And I think that's a real strength
of our economy and our system.
So, those of you who are in alternative --
in either in junior colleges or alternatives
to the standard four-year college,
I think those are very important.
In terms of why the recovery is slow, that's
obviously something that we're very interested
in and spending a lot of time investigating.
It's not at all uncommon for a recovery
that follows a financial
crisis to be relatively slow.
We've seen that historically in many other
countries as well as in the United States.
The reasons for that are several.
One is that the financial system is so important
to our economy that if the banks, for example,
have not yet recovered fully to health or
the financial markets are not yet functioning
at the normal level, that is
itself is a drag on growth.
Likewise, if you look at household finances,
one of the things that happened during the boom
that preceded our financial crisis
was that people took on a lot of debt,
house prices went up, mortgage
borrowing went way up,
loan to value ratios were very
high, the low down payments.
So, a lot of people find themselves on
the one hand worried about job security,
and on the other hand, finding that they have a
lot of debt, a lot of interest payments to make.
And so, they're cutting back.
And what we're seeing is that consumer saving
rates are going up, which is not a bad thing
in itself, but from the point of
view of the economy as a whole,
it means that consumer spending is not there
to drive economic growth the
way it normally would be.
So that, combined with the fact that our labor
market has not yet really begun to take off,
although it is expanding, again, means that
there's still an air of caution in the economy,
both on the part of households and on the
part of businesses, that is keeping growth
from being as rapid as we would like.
That being said, the National Bureau of
Economic Research, as you probably know,
declared the recession over in June 2009.
Now, what that means, just to
make sure everybody understands,
means that as of around June of last year,
the economy stopped contracting
and since then has been growing.
Now, it doesn't mean we're back to normal.
It doesn't mean that unemployment
isn't way too high.
It doesn't mean that a lot
of people aren't suffering.
It doesn't mean any of those things, but it does
mean that we are growing, the economy is moving,
at least -- perhaps not as quickly as we would
like, but it is moving in the right direction.
And we want to make sure
that that progress continues.
