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[qqqbear]

Conference Board Economists: U.S. Economy Transitioning To A New Normal
Posted: 02/13/2012 10:01 am

"The economy that we had before the recession is gone," said Kenneth Goldstein, economist at the Conference Board. "It's not coming back."

The U.S. economy is transitioning to a new normal in which businesses invest less and consumers spend less than before the recession,

He said that businesses, consumers and the government would need to spend at least $1 trillion more than they are likely to spend in order for the economy to return to its pre-recession growth rate. But he added that no one is willing to spend the money necessary to jumpstart the economy, since the government is cutting spending, consumers are saving more, and businesses expect a lower return on their investments.

"Where's the money?" Goldstein asked.

Consumer confidence has been at recessionary levels for the past four years, according to the Conference Board's Consumer Confidence Index.

Like consumers, businesses are spending less because they have lowered their expectations of future income, Goldstein said. While businesses could expect returns of 8 to 12 percent on their investments before the recession, they are now expecting returns of about half that amount. If they raise prices too much, consumers will choose cheaper alternatives, he said.

Exports are one of the only bright spots sustaining U.S. economic growth at this slower pace, he added.

Now that people's homes are often worth less and credit is expensive, people are relying on their wages to be able to spend money -- and their wages have barely been growing,

"If you just take a look at the fundamentals alone," she said, "you cannot get back to the levels of consumer spending that we had prior to the crisis."

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[shooter]

Ahem....what about the viability of debt structures dependent on significant growth?  How about the eventual and certain end to central Gov deficits approaching 10% of GDP, and giving us 2% growth.  As for that "bright spot" of exports....in case anyone had not noticed...the rest of the world is set to come unglued.....  The normalcy bias...even amongst those who claim to be showing us a more negative outlook...is stunning...