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What will the new economy look like? And when will it be here?

Robert Reich suggests we should stop waiting for the old economy to recover because the old economy was unsustainable.

My prediction, then? Not a V, not a U. But an X. This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.

The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.

Mark Thoma agrees and explains.  If they're right, and I'm inclined to think they are, it's very hard to see what the new economic drivers will be.  We need something to drive up domestic wages, but core policies are still oriented toward reducing labor costs.  Obama's green jobs push seems too small to have a big effect on the whole economy.  We've run a trade deficit for 26 of the last 27 years, so an export led recovery seems unlikely.  What are the realistic possibilities?

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Reader Comments (3)

The new economy will be more thrifty and will encourage and support business and their advertising efforts a little more. They will also support the entities who small businesses rely on such as banks and health insurance organizations.

August 2, 2009 | Unregistered Commentermlgreen8753

I think this was a very nice post. I really don't think that there will be a quote new economy until people change their views on life. Anthony Hunter
Free Energy Solar Panels

September 28, 2010 | Unregistered CommenterAnthony Hunter

Innovation is breaking down the oligopolies. Slow recovery as everyone is still recovering from the credit bubble. The younger generation can't even think about saving for retirement at this rate.

Regards, Jason

June 19, 2014 | Unregistered CommenterSPA ETF

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