The Fear of “L”

WASHINGTON, DC – For the last few years, economists have been running through the alphabet to describe the shape of the long-awaited recovery – starting with an optimistic V, proceeding to a more downbeat U, and ending up at a despairing W. But now a deeper anxiety is beginning to stalk the profession: the fear of what I call an “L-shaped” recovery.

Viewed in the light of the past five dismal years, 2013 was not bad for the advanced economies. The eurozone technically emerged from recession, the unemployment rate in the United States was lower than in previous years, and Japan began to stir after a long slumber and the negative shock of the earthquake and tsunami in 2011.