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The US economy since the crisis: slow recovery and secular stagnation

Robert Blecker

European Journal of Economics and Economic Policies: Intervention, 2016, vol. 13, issue 2, 203-214

Abstract: The US economy has experienced a slowdown in its long-term growth and job creation that predates the Great Recession. The stagnation of output growth stems mainly from the depressing effects of rising inequality on aggregate demand, while both increased inequality and the delinkage of employment from output have their roots in profound structural changes to the US industrial structure and international position. Stagnation tendencies were temporarily offset by debt-financed household spending before the financial crisis, after which households became more financially constrained. Meanwhile, fiscal policy has shifted toward austerity while business investment has failed to keep up with the boom in corporate profits in spite of low interest rates. Slower US growth in turn exacerbates the global slowdown as it implies smaller injections of demand into global export markets.

Keywords: US economy; secular stagnation; jobless recovery; financial crisis; Great Recession (search for similar items in EconPapers)
JEL-codes: E20 E32 O51 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:elg:ejeepi:v:13:y:2016:i:2:p203-214