At some point there will be recovery to a new equilibrium. We're beginning to see it now, finally, six years after the start of the Lesser Depression.
This was a bad one; the only reason it was not as bad as the Great Depression was because of the moderating effect of Social Security benefits and unemployment insurance. How bad was it? From Calculated Risk, the scariest chart ever, up to the moment:
The economist I trust the most, Bill McBride, who writes the Calculated Risk blog, wrote this morning:
Residential investment (RI) has bottomed and is now contributing to economic growth. Since RI is usually the best leading indicator for the economy, the economy will probably continue to grow for the next couple of years.
We obviously are not going back to the way things were before. The new equilibrium, for example, will feature widespread unemployment as a constant, at least for the time being. The price of oil changes everything, also. But we're not going to continue forever in crisis mode.
The widespread unemployment, by the way, is partly a function of that new and backassward approach to fighting recession, austerity. At this point the federal government is not spending enough on anything except "defense" to stimulate employment.
I know, I know, everybody's saying (especially everybody to the right of Olympia Snowe) federal spending has "exploded" under Obama. Uhh...
Click on the second graph to make it large enough to read. To get a clear view of the first graph (scariest chart ever) go here.