Dallas Fed Research Director Harvey Rosenblum discusses the stability of the U.S. economy's Great Moderation and how it set the stage for the financial turmoil that has gripped the nation since August 2007.

The Great Moderation impacted job growth across nearly all regions over a fairly short period of time.

Through much of 2008, the Texas economy continued to expand while the nation fell into recession. Growth in the energy and high-tech sectors and rising home prices were key factors in making Texas' economy one of the nation's strongest. ; In the last half of the year, however, the state's...