For several years, we have been patiently waiting for the economy to return to normal, whatever that means. The optimistic view is that eventually we will return to a time when we can talk about how good the economy is and how fortunate we are to be participants. This view is consistent with the idea that slow growth in real wages, low levels of labor force participation and high unemployment rates among certain groups are merely temporary phenomena.
As expressed by writer Tyler Cowen, the optimist view is based on the premise that these issues will become less acute after an additional period of adjustment. There are others who take a different view, and believe that the economy won’t return to normal anytime soon. In the words of University of Toronto economist Richard Florida, we may be experiencing the Great Reset.
As an example of what may be a new economic dynamic, wages for the typical four-year college graduate have declined by more than seven percent since two thousand. That means they have less income to spend, diminished resources with which to rent an apartment or purchase a home, and perhaps even permanently altered career expectations. The implication is that slow growth could be around for a lot longer than many people forecast.
