Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts

of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org

where you can subscribe, find other episodes, comment on this podcast, and find links to

another information related to today's conversation. Our email address is mailadicontalk.org. We'd

love to hear from you. Today is July 12th, 2011, and my guest is John Taylor, the Marian

Robert Raymond Professor of Economics at Stanford University and the George P. Schultz Senior

Fellow in Economics at the Hoover Institution. John, welcome back to Econ Talk.

Great to be back, Vess. We're going to start off by talking about what's going on in

the economy right now. We're doing this in July of 2011. The recent jobs report for June

of 2011 with the revisions in April and May was very disappointing. Unemployment has been

over 9% for roughly two years. There's a couple of months that dipped under 9, but things

don't look very good. What's your assessment? I think this has really been a very disappointing

recovery from the beginning. It's now just about two years old. It compared to the recovery

from the most recent deep recession in 81-82. It's incredibly weak, almost non-existent.

For example, coming out of the 81-82 recession, that recovery's first two years had seven

percent growth. So far, this is 2.8. It looks like the second quarter when we get the

number will be even below 2%. We don't know yet, but it's very disappointing. I think

to analyze this, you've got to think about this whole picture. That's why I keep coming

back to the policy. What's different now is the policy. We're doing many different things

than in the last recovery, and I tend to focus on that. But there's differences of opinions

and some people talk about the balance sheet out of line. Some people talk about the

zero interest band, but I think basically it's an erratic set of policies across the board,

...