Where Is The Secular Stagnation?
Marc Chandler | Oct 21, 2014 02:23AM ET
This Wilson Quarterly , and draws from World Bank data. The US economy is on a parallel but somewhat lower path than it was on through the 90s and noughts. The US economy is creating more goods and services than ever.
China's nominal growth has accelerated over the past decade. It reflects not just China's real growth, but incorporates inflation, which has run consistently higher in China than the other countries here, and the yuan's appreciation. The appreciation of the yuan coincides with the acceleration of China's nominal growth in US dollar terms starting in 2005. Although it is difficult to tell it from the chart, the economy has grown 24-fold since 1989. In the same time, the US economy has grown three-fold.
The charts covers the 1989-2010 period. In the last couple of years, the Chinese economy has slowed. However, in nominal terms it is still poised to double over the decade. It may take the US economy closer to 20 years to double.
The resurrection of the secular stagnation theory by Lawrence Summers has captured the imagination of many, and in some ways, encapsulates the present angst. However, it is difficult to spot it in the data--not for the US, China, or even Japan. Russia too appears to have been expanding, albeit slowly, before the confrontation over the Ukraine. The stagnation appears most evident in Germany, France and the UK. However, it is not clear from the data that it is secular in nature.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.