The financial crisis that started the Great Recession is now far behind us. Indeed, by most measures it ended more than four years ago. Yet our economy remains depressed.
. . .
Mr. Summers went on to draw a remarkable moral: We have, he suggested, an economy whose normal condition is one of inadequate demand — of at least mild depression
— and which only gets anywhere close to full employment when it is being buoyed by bubbles.
I’d weigh in with some further evidence.
. . .
Again, the evidence suggests that we have become an economy whose normal state is one of mild depression,
whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing.
Why might this be happening? One answer could be slowing population growth. A growing population creates a demand for new houses, new office buildings, and so on; when growth slows, that demand drops off. America’s working-age population rose rapidly in the 1960s and 1970s, as baby boomers grew up, and its work force rose even faster, as women moved into the labor market. That’s now all behind us. And you can see the effects: Even at the height of the housing bubble, we weren’t building nearly as many houses as in the 1970s.
Another important factor may be persistent trade deficits, which emerged in the 1980s [Translation: Blame Reagan!!!]
and since then have fluctuated but never gone away. [Did Krugman just tell a lie?: Click the link and find out-->>
"Until 1970, the United States enjoyed a surplus in its merchandise trade with the rest of the world. Since then, with oil prices higher and competition from its trading partners keener, trade deficits have been the rule.
http://www.nytimes.com/2013/11/18/opini ... slump.html