If there is one thing on which almost all Americans agree it is that the performance of their economy has been disappointing: growth is too slow and joblessness is too high. A large proportion of the electorate is prone to blame the president for its disappointment. It is a wonder that, in these circumstances, Barack Obama still has a chance of winning. Nor is this state of affairs surprising. Early in February 2009, I opened a column by asking: “Has Barack Obama’s presidency already failed?” My argument was that “doing too little is now far riskier than doing too much”. The president did indeed act, but not decisively enough.
That was the past. Now consider the future. I suggest that four economic challenges are particularly important: demand, supply, inequality and fiscal solvency.
Economists on both sides of the divide admit the weakness of private demand, while disagreeing on the cause. My difference from both is that I believe this weakness is likely to prove structural, not cyclical.