The New “New Normal”: Are We in a “Growth Recession”?

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Remember the days when one catch phrase could sum up our entire economy? In the 1970s, it was “stagflation,” the idea that inflation could be high even when economic growth was low.  In the early 90s, the “jobless recovery,” a term coined during Bill Clinton’s presidential campaign, referred to the lingering recession that eventually ousted George H.W. Bush from the White House.

As for today’s economic malaise, the jury is still out on what pithy moniker will rule the day. For a while following the financial crisis, the phrase the “new normal,” claimed by bond fund manager PIMCO’s Mohamed El-Erian, seemed like the strongest contender. It referred to the idea that this economic turnaround would be slower and less impressive than those of recessions past. On the investing side, this meant painfully adjusting to a long period of lower-priced stocks and bonds. On the economic side, the “new normal” was about a shift in power from rich countries like the U.S. and Britain, which have long been the more trusted and stable, to emerging markets like China and India, which the world used to consider more volatile and unreliable.

So far, the bit about China and India has pretty much played out as expected — especially now that Greece and other debt-riddled European economies are going up in flames. (After all, IMF rescues used to be the stuff of little-guy countries like Malaysia, Thailand, and Argentina, not big industrialized countries like Portugal and Spain.) As for the U.S., things haven’t been going the way many had hoped. The stock market has rebounded quite well, thanks in part to the Fed’s bond-buying spree, and yet more people are out of work. And so, the hunt for a new handle to describe this recession is back on.

The current slump could be a “soft patch,” a temporary slide caused by the Japanese tsunami, the Arab Spring, and recent bad weather; a “double-dip,” which is a period of negative growth following what was the beginnings of a rebound; or, perhaps the most deflating option, a “growth recession,” in which the economy grows meagerly in fits and spurts, but not fast enough to create jobs. As was the case in Japan, a “growth recession” could result in a country filled with “zombie consumers,” paving the way to America’s own “lost decade.” Jobs may not be in high supply in this economy, but catch phrases are being produced at record speed.

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