The terrifying idea that the economy might stay stuck forever just got more terrifying - The Washington Post: "The U.S. economy has fallen, and it can't get up.
At least that's the way it seems. That's because our slump hasn't really ended, even though the Great Recession officially did more than five years ago. Growth has been low, unemployment is still high, and it'd be even more so if the labor force hadn't shrunk so much. And all this, remember, has happened despite interest rates being zero the whole time. It's the opposite of what we would have expected: big crashes are usually followed by big comebacks. So why has this time been different?
Well, it hasn't — not if you compare it to other recoveries from financial crises. These, as economists Carmen Reinhart and Ken Rogoff have shown, tend to be nasty, brutish, and long: it takes, on average, eight years just to make up lost ground. But even so, this doesn't fully explain the kind of persistent economic weakness we've seen here and most everywhere else. Look at Japan. Its own bubble burst in the 1990s, and since then even zero interest rates haven't been enough to save it from first one, and then two, lost decades. The same is happening to Europe today. Bad recoveries, it seems, have a way of turning into bad economies that never get better."
'via Blog this'