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Wednesday, August 27, 2014

Debunking the Myth That Deleveraging Is Why US Growth Is Poor

Andrew Smithers has debunked the myth that deleveraging is to blame for slow US growth on his blog today. The reason why growth is slow is that the US economy is stuck in a long term decline in growth that predates the last recession. Smithers concludes:
First, the US recovery has been slow because its long-term capacity for growth has slowed, and the recovery cannot therefore be sensibly described as feeble.
Second, the evidence is against the growth of debt in the US being associated with growth of the economy.
And third, growth has not been held back by a wish to deleverage private sector balance sheets.