Whatever Happened to the New Normal?

Forecasters in 2009 correctly foresaw the political and macroeconomic trends, but they failed to understand how those events would affect equities

John Rekenthaler 28 November, 2018 | 9:46AM
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The most-cited economic forecast of this millennium has been 2009’s “New Normal” prophecy, which posited that this time was indeed different. The economic future would differ sharply from that of the past, not least because of the trauma of the financial crisis. In short, there would be sluggish growth in the in the United States and Europe, more government intervention and social unrest.

Kudos to the seers! Growth was, as predicted, disappointing. In the United States, the highest real calendar-year GDP growth rate was but 2.7% in 2014, as opposed to above 5% during the previous expansion and almost 5% during the 1990s. The forecast for government activities was solid, too. Governments did get more involved, albeit more by strengthening their fiscal policies through quantitative easing than by creating new restrictions, and the feared trade conflicts have arrived. As, of course, has social unrest – and the revival of populist nationalism in the US and Europe.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Amazon.com Inc3,376.07 USD1.68Rating
Tesla Inc1,018.43 USD-0.63Rating

About Author

John Rekenthaler

John Rekenthaler  John Rekenthaler is vice president of research for Morningstar.