The economic news is bleak. Dean Baker warns that we are very close to a second Great Depression. Tim Duy says that the economy is “circling the drain.” Doug Henwood observes that while the US economy used to be a “brutal but dynamic place” for workers, now it’s just brutal. If employment growth continues at May’s pace (a rate typical of post-financial-crash economies), it will take us a decade just to gain back the jobs lost in the Great Recession.
Back in 2008, many weighed the relative likelihood of deflation or hyperinflation. Today’s via media is stagflation. Commodities are becoming dearer, and consumers feel the squeeze, whatever the mathemagicians behind inflation stats say. We have entered a “great stagnation,” and our political leaders are content to utter platitudes about “expansionary austerity” or “innovating our way” to “win the future.” How either strategy will save the 22 to 29% of US jobs that are offshorable remains unclear.
Since nobody likes an unhappy ending, a boomlet of “soft landing” stories has emerged, explaining why (as Tyler Cowen puts it) “we’ll feel better” eventually. I want to take a look at a few of these, discuss why I think they’re implausible, and turn our attention to what the real stakes of the crisis are.