Deutsche Bank’s Torsten Slok just circulated an email making a big statement about the economy: secular stagnation is over.
Secular stagnation, the theory first posited by Larry Summers last year in a speech at the IMF, basically says that we are in a new economic equilibrium that will see slower growth than we’ve seen since World War II.
In his note, Slok writes:
The latest data for retail sales, durable goods, ISM, and jobless claims have been pointing to accelerating growth and the consensus expects 3% growth for the coming 6 quarters (type OUTL <Go> in BBG to see consensus expectations). In other words, the headwinds are fading and we are about to break out from the two per cent GDP growth range that we have been in over the past four years, see also the chart below. This means higher nonfarm payrolls and lower unemployment going forward. And a more and more hawkish Fed.”
So there you have it: according to at least one Wall Street economist, our recent economic malaise is over.
Here’s the chart to back it up.
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