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The Doldrums

9:13 AM, Jun 12, 2014 • By GEOFFREY NORMAN
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Initial claims came in, this morning, slightly higher (317,000) than expected (310,000). While retail sales were, on the other hand, slightly lower.  Expectations (i.e. hopes) were for an increase of 0.6 percent. Seems we’ll have to settle for half that. Which would lead one to conclude that the economic bounce off the floor of a 1st quarter during which the economy shrunk may not be all that forecasters – and just about everyone else – had hoped.  Now, in fact, we hear talk of an era of slow growth.  

As Binyamin Appelbaum of the New York Times reports:

It has been five years since the official end of that severe economic downturn. The nation’s total annual output has moved substantially above the prerecession peak, but economic growth has averaged only about 2 percent a year, well below its historical average. Household incomes continue to stagnate, and millions of Americans still can’t find jobs. And a growing number of experts see evidence that the economy will never rebound completely.

For more than a century, the pace of growth was reliably resilient, bouncing back after recessions like a car returning to its cruising speed after a roadblock. Even after the prolonged Great Depression of the 1930s, growth eventually returned to an average pace of more than 3 percent a year. But Treasury Secretary Jacob J. Lew, citing the Congressional Budget Office, said on Wednesday that the government now expected annual growth to average just 2.1 percent, about two-thirds of the previous pace.

Welcome to the economics of fatalism.

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