Newsletter Article
- Belfer Center for Science and International Affairs, Harvard Kennedy School Belfer Center Newsletter
Spring 2014
In a major two-part op-ed in the Financial Times in January, Larry Summers presents his judgment that in the aftermath of the Great Recession, the U.S. economy appears to be stuck in “secular stagnation.” By “secular stagnation,” he means the coincidence of sluggish output and GDP growth, less than 2% since the start of this century, employment levels below potential, and problematically low real interest rates. To escape what he foresees is likely otherwise to be a long period of very slow growth, he proposes a set of policies to spur demand: ending the trend toward reduced government spending, leveraging low interest rates to make investments building infrastructure, and boosting private spending in the energy sector. (In his New Year’s Day op-ed, “2014: Good Year for a Great War?” in National Interest, Graham Allison noted that there is another option, the one that finally rescued the U.S. from the Great Depression, but cautioned against going there.) For a recent elaboration of Summers’ argument, see http://forum.iop.harvard.edu/content/state-economy.