Carmen Reinhart, coauthor of This Time is Different: Eight Centuries of Financial Folly, has released a paper titled “After the Fall”. Within the paper she suggests that we are in for a long slug of slow and grinding growth:
“Real per capita GDP growth rates are significantly lower during the decade following severe financial crises and the synchronous world-wide shocks. The median post-financial crisis GDP growth decline in advanced economies is about 1 percent….In the ten-year window following severe financial crises, unemployment rates are significantly higher than in the decade that preceded the crisis. The rise in unemployment is most marked for the five advanced economies, where the median unemployment rate is about 5 percentage points higher. In ten of the fifteen post-crisis episodes, unemployment has never fallen back to its pre-crisis level, not in the decade that followed nor through end-2009.“
It’s a good read to dampen any optimistic outlooks for developed economies. Read the full paper here:[Download not found]
