The article everyone’s buzzing about right now comes to us from Binyamin Appelbaum at the Economix blog…
Recessions are generally regarded as abnormal disruptions and recoveries as inevitable returns to normalcy — in large part because that is how the economy has behaved for more than a century. Even after the Great Depression, growth returned to its long-term trend; it just took a while.
The bleaker view – which remains, to be sure, the view of a distinct minority — is that the years before the recession were abnormally good, and that while the recession was abnormally bad, reality lies halfway in between.
The present situation, in other words, is about as good as it gets.
A paper that will be presented Thursday afternoon at a conference organized by the Brookings Institution is the latest contribution to this literature.
Essentially, a Harvard prof and a Princeton prof make the case that because of demographics and other things about the makeup of the workforce, growth was already slowing and on a weaker course before the 2007 credit event came along – now that we’re past that, you’re basically looking at as good as it gets. This will be controversial in many circles but an important read.