Monday January 23, 2012 Slow Growth Ahead? From Lost Decade of Growth for the West By Stella Dawson

Monday January 23, 2012. Slow Growth Ahead?  From Lost Decade of Growth for the West By Stella Dawson

Although the United States has shown encouraging signs in recent weeks, the economy remains far too feeble for any upturn to be either strong or sustained. Europe is no better off and already appears to have fallen back into a mild recession. Goldman Sachs calculates that per capita GDP growth in the United States has shrunk by 0.7 percent each year between 2007 and 2011, compared with 2.0 percent growth in the decade prior to the recession. In the euro area, the decline has been similar, 0.6 percent drop against a 1.8 percent pre-recession rate. The concern is that the destruction of skills and capital investment caused by recession and slow growth rates will lead to a structurally lower rate of growth and higher rate of unemployment for a protracted period. If left unchecked, it would make it even harder to handle huge government debt loads, making the growth outlook even less stable. Jerome Levy Forecasting sees the United States trapped in a low growth cycle throughout the rest of this decade, at least until household debt levels are paid down, businesses have restructured to regain competitiveness and wage growth returned. "We are not holding our breath for a rapid turnaround. In fact for this year, we are investing in scuba gear in case it worsens," said economist Robert King.