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Top Obama Adviser Says Economy is Recovering

More than 70 percent of wealth lost in the recent financial crisis has been regained

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October 11, 2012 | by Wendy Leopold

EVANSTON, Ill. --- “The U.S. economy is slowly healing,” said President Barack Obama’s chief economic adviser to an estimated 400 Northwestern University students, faculty, Evanston community members and Evanston Township High School students who packed Norris University Center’s McCormick Auditorium Monday, Oct. 7.

Alan Krueger, chair of the President’s Council of Economic Advisers, was at Northwestern as the 2012 Distinguished Public Policy Lecturer of the Institute for Policy Research (IPR). One of the nation’s leading labor economists, he answered questions posed by IPR director and School of Education and Social Policy Professor David Figlio before taking questions from the general audience. 

“We are recovering from the worst recession we’ve had since the Great Depression,” Krueger said, pointing to the creation of 5.2 million new private sector jobs in the last 31 months, growth in home prices over the past three to four months, rebounding local and state government jobs and, most recently, an increase in construction jobs.

Krueger is an expert on unemployment, job markets, income inequality and the economics of education. In his role as chair of the President’s Council of Economic Advisers, he provides President Obama with objective economic analysis and advice on the development and implementation of domestic and international economic policy.

Tying education to the strength of the economy, Krueger said the Obama administration was fighting hard to keep student loan interest rates low. “In the long run, I think our success fundamentally depends on improving our educational system, not only K-12, but also ensuring that more students have access to post-secondary education.”

Krueger spoke about the role of research in policymaking and the difference between working in government and academia. Working for the government requires a lot more teamwork and consensus, said Krueger, who is on leave from Princeton University. He previously served as Department of Labor chief economist in the Clinton administration and as Department of the Treasury assistant secretary and chief economist under President Obama.

“Sixteen trillion dollars of wealth were destroyed in the financial crisis -- over 20 percent of all the wealth held by (U.S.) households and financial institutions,” Krueger told the Northwestern audience. “Over 70 percent of that has been regained (with) improvements in the equity markets and stabilization of housing markets. But because so much wealth was destroyed, household balance sheets are in worse shape, and that has been the headwind for consumption that often fuels recoveries.”