Photo: Twitter / @dgjackson
Paul Ryan is tired of hearing the phrase “new normal.”On Saturday, when U.S. presidential candidate Mitt Romney announced the congressman as his vice presidential running mate, Ryan said, “I hear some people say that this is just ‘the new normal’…high unemployment, declining incomes and crushing debt is not a new normal. It’s the result of misguided policies.”
Mohamed El-Erian, CEO of PIMCO–the biggest bond fund in the world–is credited with popularizing the term “new normal” in the financial community in the wake of the 2008 financial crisis, and he’s not thrilled with the way Paul Ryan is using the phrase.
Ryan is correct that the new normal is a result of “misguided policies,” although we have different definitions of misguided. (For me, this is less about the role of government, outsourcing and tax dis-incentives per se, and more about an economy that must find a way to safely “deleverage.” We must overcome the many years during which policymakers lost sight of sustainable drivers of growth and jobs and instead ended up relying on excessive leverage, over-indebtedness and an absurd sense of credit entitlement.)
Yet Ryan may be too hasty in dismissing the extent to which the new normal is becoming embedded in our economy and, with each passing week, transitioning from a short-term exception into an even more painful multiyear reality.
El-Erian warns that if Congress doesn’t act soon, he next generation of Americans will have less opportunities than their parents, echoing other comments by Ryan on Saturday.