Tomorrow, Federal Reserve Chairs Ben Bernanke and Janet Yellen will offer lessons from the response to the 2008 economic crisis in a hearing before the House Oversight Select Subcommittee on the Coronavirus Crisis.

The former chairs, who were instrumental in managing the U.S. economy during and after the 2008 financial crisis, will discuss the federal government’s response to the economic impacts of COVID-19.

Both Bernanke and Yellen have emphasized that public and private sector actions taken now will have economic and health consequences for years. And both have indicated the federal government needs to help stabilize the economy, particularly those hardest hit by the virus.

Earlier this week, Bernanke underscored that “Congress must act decisively – and it must act in ways that don’t repeat the mistakes of the recent past during the Great Recession,” including offering greater stimulus support for state and local governments.  

According to Bernanke, the positive boost from the 2009 federal stimulus package was partially offset by the fact that balanced budget requirements forced state and local governments to cut spending and employment. The federal government quickly turning to a more restrictive fiscal policy increased these headwinds.

While we’ve seen some positive economic numbers in the past few weeks, other troubling indicators signal the economy is losing momentum. California, Florida and Texas, which make up about 30% of U.S. economic output, are currently seeing COVID spikes, forcing them to reconsider reopening plans. 

As these spikes persist, likely additional shutdowns could slow or stall our economic recovery.