Will America Ever Fully Recover?

April 12, 2012 in Daily Bulletin

Binyamin Appelbaum reports on two economists who suggest that America’s growth rate was abnormally high in the year’s leading up to the recession and that the new rate of growth will be permanently lower. Highlights of the argument include:

  • Current popular theories for why growth is low include that financial crises are particularly bad for economic growth, or that the high levels of individual debt is holding back the economy.
  • Both of these views are inherently optimistic – they assume that the United States will at some point return to its pre-recession growth rate.
  • However since the growth of the labour force has slowed, and women are no longer entering the workforce at the same rate, economic growth might be permanently lower from here on out.

To read more about the caveat that the model has, graphs that depict the argument, and what the good news is, click here.

Source: New York Times