Lost Decade

As current economic indicators reflect an anemic recovery at best, we must now consider the fact that a deflationary spiral is not only possible but probable. This phenomena occurs when an economy spends more time in a recessionary mode as opposed to an expansion mode. Our best example of this is Japan where a whole decade of growth progress was lost in there last recession. Choked off by bad loans on banks balance sheets lending was stalled and resulted in a pullback in consumer spending, businesses cut back on inventory and laid off workers, prices fell as a result. A double dip recession is a better scenario because you can move forward and be done with it, as opposed to feeling the long lasting effects of a lost decade. Job creation is the key to reactivating the economic engine of long term growth, without it this country will continue to follow Japans precarious example by history repeating itself here in the United States.