Bob Fraser shows how US capacity utilization collapsed during the 2008 financial crisis, leaving factories idle. The Bush and Obama administrations responded with stimulus spending: $0.7 trillion from the Economic Stabilization Act and the American Recovery and Reinvestment Act. Fraser argues this spending was appropriate because it filled a demand gap without causing inflation.
So what this shows is the capacity utilization of United States. And here's what I wanna show you. This is the great financial crisis right here, this gray area. And so what happened when that hit, Bush immediately did this Economic Stabilization Act of $0.7 trillion. Obama comes in behind and pushes this American Recovery and Reinvestment Act. And notice the timing, it's when capacity utilization is low. So the idea is the factories are idling, there's, there's, you know, there's no orders coming in, you know, business is slowing down. And so these are welcome creating demand. So if, if you spend, if the government spends money to create artificial demand at a time when there is not enough demand, that's a good thing. It actually is not inflationary, right? So,
