The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

NOTE: THE THREAT WE FACE IS NOT INFLATION, IT’S DEFLATION.

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by Neil Irwin / Jan. 27, 2019 / NY Times

“Just when we thought we were out, global deflationary forces have pulled us back in.”


“For much of 2018, it appeared that the world economy was finally getting out of the rut it had been stuck in for the decade since the global financial crisis. But it now looks as if the era of persistently low growth, low inflation and low interest rates isn’t over after all.

In the past week alone, the European Central Bank said that economic risks had “moved to the downside,” and the Bank of Japan cut its projections for inflation.

The Federal Reserve will hold a policy meeting Tuesday and Wednesday, and is likely to leave its interest rate target unchanged.”

“Despite some promising signs of vitality during much of last year, issues that have dogged the world economy for the last decade — an aging work force in many of the biggest economies, weak growth in productivity, excessive global savings and industrial capacity, and a shortage of worldwide demand — haven’t disappeared.

That helps explain why American workers’ wages have been rising relatively slowly despite a low unemployment rate.