Deleveraging Study: U.S. GDP Growth Of 2.4% Next 4-7 Years. Unemployment Unchanged.

Below is the Economist’s summary of After The Fall, a study on post-crisis GDP and employment growth by two notable economists. The Economist piece goes on to discuss more rosy outlooks from Morgan Stanley and Deutsche Bank.

“How long will deleveraging take? In a recent paper Carmen Reinhart of the University of Maryland and her husband Vincent Reinhart of the American Enterprise Institute looked at 15 crises since 1977. They estimate that on average deleveraging lasted seven years, during which growth was a percentage point lower than in the decade before a crisis. If America follows this pattern, its GDP will grow by 2.4% for the next four to seven years. Because that roughly equals potential, job creation should only just match population growth: the unemployment rate won’t fall.”