The long slump: Shall the twain meet?

Posted: November 15, 2012 in economy
Tags: , ,

WE ARE now in the middle of the fourth quarter of 2012. That means that it has been five full years since the American economy first tipped into recession amid a gathering financial storm. How have we done since that time?

Oof. Well that isn’t very good at all. Five years later, only America has surpassed its pre-recession output. For now, it appears to be on a steady, if disappointing, growth trajectory. Japan had the worst recession of the bunch but rebounded quickly. It has since struggled amid seismic disasters and various China troubles. Britain and the euro area have until recently followed very similar trajectories, but British output turned up nicely in the third quarter while the euro area officially re-entered recession.What should we make of this figure? Some will see secular stagnation at work. Others will blame macroeconomic policy: the zero lower bound, perhaps, or insufficiently stimulative fiscal policy. Some might point out that all of these countries are trying, simultaneously, to raise their external surplus (or get one in the first place). Whatever the story, it is a remarkable state of affairs. These economies account for over half of world output (for the moment, at least).The really distressing thing is to try and project these lines forward a bit. Japan is in recession. Britain may be out of it, but on the other hand may not. The …

via Economic Crisis


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