Abet Chichi2

[Tuff-Stuff]

The Global Growth Slump: Causes and Consequences
John C. Williams
FRBSF Economic Letter 2017-19 | July 3, 2017

Crisis and recovery

The narrative of the past decade has been one of crisis and recovery.

Today, many nations are still coping with the aftermath of the global financial crisis, the euro-area crisis, and other events. Central banks remain engaged in the extraordinary policy actions they undertook to stabilize their economies and to support economic recovery.

There are encouraging signs that we are approaching a turning point, a transition from recovery to ongoing economic expansion. The United States is a case in point.

The U.S. economy has regained and even surpassed full employment benchmarks. Although our inflation rate is still somewhat below our 2% medium-term target, I and my colleagues on the Federal Open Market Committee expect us to reach that goal in the next year or so (Board of Governors 2017). As a result, we at the Federal Reserve are now in the process of gradually withdrawing the massive monetary stimulus put in place during the past decade.

And we’re not alone in this improving outlook. When you look at the economic news coming out of Europe and Japan, for instance, you see economic indicators moving in the right direction.

But wait a second, isn’t this supposed to be a speech about the global growth slump?

The big dichotomy of our times is that, in country after country, the economic news is at once both encouraging and discouraging: encouraging that economies are expanding, discouraging that growth is disappointing, at least by historical standards.

In the United States this dichotomy is profound. U.S. GDP growth has been almost as unimpressive as employment has been impressive. In the nearly eight years since the recession ended, real GDP growth has averaged only about 2%, well below former trends, while we’ve added an impressive 15 million jobs. How can both be true?

FULL @ http://ritholtz.com/2017/07/global-growth-slump-causes-consequences/