From the 'new normal' to a 'secular stagnation'

ARE the United States and Europe suffering from more than the aftermath of a major financial crisis? Might they be stuck in an unusual and prolonged equilibrium, in which frustratingly slow economic growth is the norm?

These are the crucial questions addressed in a new e-book from the Center for Economic Policy Research (CEPR) that I would recommend to policymakers, academics and investors alike.

In 2009, when I was working at the investment company Pimco, my colleagues and I argued that economic growth in the West would fail to bounce back sharply, as it typically does after a crisis-induced downturn. Instead, Western economies would face unusually sluggish growth and persistently high unemployment. We called it the "new normal". The notion was initially dismissed by many as "unrealistic" and then as too "fatalistic".