David Leonhardt: There is no boom

Want proof? Look at the economic forecasts of the past decade — and all the disappointments that have followed. View in [Browser]( | Add nytdirect@nytimes.com to your address book. [The New York Times]( [The New York Times]( Monday, March 11, 2019 [NYTimes.com/David-Leonhardt »]( [Op-Ed Columnist] Op-Ed Columnist For a decade now, the people whose job it is to predict the economy’s performance have made the same mistake, again and again and again. They have been too optimistic. The pattern started during the 2007-09 financial crisis, of course. But it didn’t end there. In the immediate aftermath, the Federal Reserve was too quick to see “green shoots” sprouting across the economy. And in the years since, forecasters at both the Fed and in the private sector have repeatedly made forecasts that turned out to be too sunny. [A chart that runs with my column today]( shows this pattern. It’s an important one, because it helps debunk the notion that the American economy is now enjoying an economic boom. If it were really a boom, the economy wouldn’t keep falling short of the experts’ predictions. I was inspired to dig into these forecasts — and the errors in them — after reading [a new academic paper]( last week, by Lawrence Summers, the former Treasury secretary, and Lukasz Rachel, of the Bank of England. That paper is part of Summers’s continuing argument that the economy is suffering from something called “secular stagnation.” The economy isn’t simply enduring a slow recovery from the crisis. Its problems are deeper, as I lay out in the column. More on ‘Secular Stagnation’ - “The core of the problem is that there is not enough private investment to absorb, at normal interest rates, all the private saving,” [Summers wrote last week]( in a Washington Post op-ed. “The result is extremely low interest rates, weak demand, and low growth and inflation, along with the bidding up of the price of existing capital assets.” - Summers also explained his “secular stagnation” theory [in a WBUR segment]( last week. - “Without the push of stimulative monetary or fiscal policy — or both — the U.S. economy will probably slow and the unemployment rate will rise,” wrote [Jared Bernstein]( also in The Washington Post, on the same broad subject. “The Democrats’ progressive agenda is not only a response to the upward redistribution that Republicans have successfully pushed since President Ronald Reagan. It is also a coherent and essential response to underlying stagnation that has grown to plague advanced economies.” - My colleague [Paul Krugman]( has also weighed in. - Ben Bernanke, the former Federal Reserve chairman, has criticized the secular-stagnation theory, as Vox’s [Matt Yglesias]( chronicled in 2015. Waiting for Mueller Regular readers may recall that Quinta Jurecic of Lawfare wrote this newsletter for a week last summer while I was on break. Over the weekend, she published [a handy guide]( to the upcoming — or so we all assume — Mueller report. Correction I misspelled the last name of Jordan Weissmann, the Slate economics writer, in a newsletter last week. It has two n’s, not one. ADVERTISEMENT If you enjoy this newsletter, forward it to friends! They can [sign up for themselves here]( — and they don’t need to be a Times subscriber. The newsletter is published every weekday, with help from my colleague Ian Prasad Philbrick. 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