If you add the last six years of U.S. budget deficits and the Fed's injection of cash into the economy, the total is approaching $10 trillion. It's hard to believe that all this stimulus didn't aid the recovery, but the fact that it resulted in only modest growth has created an identity crisis for economists. The promise they held out was that, through suitable economic policies, they could produce long periods of stable growth and — just as important — avoid prolonged slumps and lengthy periods of substandard growth. Clearly, they aren't delivering on this promise.
The Great Recession and financial crisis changed behavior in fundamental ways that economists have yet to incorporate fully into their models or theories. The widespread faith that modern societies were sheltered from deep and sustained economic setbacks has been shattered, causing consumers, business managers and bankers to be more cautious in borrowing and spending. Economic stimulus may offset this caution, but if it signals that the economy is weaker than expected, it may also further depress private spending. There are countervailing tendencies.
The faith in economics was, in many ways, the underlying cause of both the financial crisis and Great Recession — it made people overconfident and careless during the boom — and the basic explanation for the weak recovery, as stubborn caution displaced stubborn complacency. To regain relevancy, economists are searching for a new light bulb — or better use of the old. Meanwhile, most are still sitting in the dark.
Robert J. Samuelson is a Washington Post columnist.
- Robert Bennett: Obama has his own 'killer...
- In our opinion: Trouble on tap? Colleges...
- Drew Clark: Religious freedom is more than a...
- In our opinion: Labor Day revisited
- John Hoffmire: Monied interests and democracy
- Frank Pignanelli & LaVarr Webb: How Utah...
- Charles Krauthammer: Solution to inversion is...
- In our opinion: A slippery 'immoral' Tweet
- In our opinion: A slippery 'immoral' Tweet 45
- Mary Barker: Our economic discourse... 43
- Drew Clark: Religious freedom is more... 41
- Charles Krauthammer: Solution to... 37
- Constitutional commitments trump tribal... 35
- Letter: Society puzzles 33
- Join the discussion: Is Common Core... 32
- Jay Evensen: Utahns support Common... 31