Before you get too excited about the coming recovery, have you heard about the “new normal?”
The “new normal” is the term that many have been using for economic growth that is slower than what we became accustomed to over the past decade or so. Doug Dachille, of First Principles Capital Management, says in this clip from CNBC that the “new normal” is really the “old normal.” His position is that the economy really only grows in great bounds when technology increases productivity in a dramatic fashion. That happened in the 1990’s, and the growth in the 2000’s was not based on “real growth” but by financial machinations, according to Dachille. In statistical terms this is called “regression to the mean,” but in layman’s terms we can just call it average.
The video is informational throughout, but the pertinant part starts at about 3:30 and runs about two and half minutes.