05.29.12 1:00 PM ET
2011's Debt Ceiling Debacle
How much harm did it do? It nearly wrecked the recovery, Wharton profs Justin Wolfers and Betsey Stevenson argue in today's Bloomberg View:
High-frequency data on consumer confidence from the research company Gallup, based on surveys of 500 Americans daily, provide a good picture of the debt-ceiling debate’s impact (see chart). Confidence began falling right around May 11, when Boehner first announced he would not support increasing the debt limit. It went into freefall as the political stalemate worsened through July. Over the entire episode, confidence declined more than it did following the collapse of Lehman Brothers Holdings Inc. in 2008. After July 31, when the deal to break the impasse was announced, consumer confidence stabilized and began a long, slow climb that brought it back to its starting point almost a year later.
Let's go to their charts.
Consumer confidence first:
The effect on employment next:
Let's never, ever do anything like this again, please.