The United States of Japan?
America is following in the country's deflationary footsteps.
The US is following the footsteps of Japan; it's now undeniable. Please consider the following chart.
Japanese GDE from the 1989 Peak to Present
US GDP 1999 Peak to Present
Offset is ten years.
Click to enlarge
The above chart is from my friend "BC" who writes:
"The rate shown is the trend rate of growth of GDP at any point from the secular peak rate.
"For example, for the US, the real GDP trend rate in the '90s was 3-4%, whereas since the '99-'00 peak the trend rate has fallen to the 1.5-2.5% range for the '00s (1.6% today).
"For Japan, the real GDE trend rate in the '80s was 4-6%, with the trend rate since the '89-'90 secular peak falling to 1-1.5% to 2% (0.91% today).
"A chart of the trend rate since '97 or '00 in Japan would show an even slower trend rate of real GDP at 0.4-0.5%. Similarly for the US, the trend real GDP rate since '04 and '05 is barely 1% to 0.6% respectively.
"I suspect we will see a further deceleration of the trend real GDP rate hereafter from ~1.5% to 1% or less through the late '10s, including 2-3 more recessions, i.e., 'multiple dips,' along the way.
"It's repeatedly said that we're not Japan; however, in some respects we might be worse this time around, i.e., the depth of our recession today versus that of Japan in '97-'98 (Asian crisis).
"To get back to a trend of 3.3% real growth from '00, the US would have to grow at an average real rate of 5.5% through '14-'15.
"For a 2.5% trend rate from '00 (the current average trend rate since '80), average real growth would have to be 3.5-4% for the next 5-6 years.
"Japan's real GDE grew at just 0.4-0.6% from '97 to '01-'03, with ~1% price deflation, "QE, and ongoing bailouts and government spending.
"So, in the context of the likely secular trend, double dips and "recovery" will tend to be moot issues. We're more likely to have multiple dips, little or no growth, and the only recovery will have been from 10% real GDP contractions along the way.
"We'll have recovered from nearly having falling off the ledge into the abyss; but our climb from the ledge will be steep, long, and yield little progress."
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