Summary of Understanding the New Normal

The Role of Demographics

Federal Reserve Board,

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Understanding the New Normal summary
The US’s slow economic growth and low interest rates are now the “new normal.”

Rating

7 Overall

8 Importance

8 Innovation

6 Style

Recommendation

GDP growth in the United States continues to slog forward at a pace far below its long-run historical average of about 3% annually in the years following World War II. Particularly troubling is the anemic recovery following the Great Recession. Despite the Federal Reserve’s attempts to boost the economy, strong GDP growth remains elusive. Economists Etienne Gagnon, Benjamin K. Johannsen and David Lopez-Salido contend that constrained US growth is the result of an entirely predictable outcome based on demographic patterns. getAbstract recommends their scholarly report to executives and investors interested in understanding this “new normal.”

In this summary, you will learn

  • Why the United States economy is experiencing a “new normal,”
  • Why demographic trends related to the baby boom generation explain the economic environment
  • How these trends will affect the US economy in the future
 

Summary

The Federal Reserve’s attempts in the wake of the Great Recession to reinvigorate the US economy through extraordinarily accommodative monetary policy have generated lackluster results. Some experts hold deleveraging and credit obstacles accountable for persistently low growth and low interest rates...
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About the Authors

Etienne Gagnon, Benjamin K. Johannsen and David Lopez-Salido are economists with the Board of Governors of the Federal Reserve System.


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