ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
Home Economy

At a Standstill? The Debate over ‘Secular Stagnation’

April 29, 2015
Reading Time: 3 mins read

By Carl Tannenbaum

During one particularly stormy day this winter, I asked my daughter unearth herself from the couch and help me clear the snow from the driveway. Unfortunately, the prospective reward of industry was no competition for the television remote, and I was left to fend for myself.

Before braving the accumulating squalls, I warned her that prolonged inactivity could doom her to secular stagnation. She rolled her eyes at the econo-speak and turned her attention back to The Walking Dead marathon.

I found irony in her choice of programming as I shoveled. Some in my profession have suggested that developed economies are heading for a zombie-like state, with little growth and frightening consequences for those left alive. Dark-siders suggest that measures aimed at animating things have become increasingly extreme and have done little to slow the advancing danger.

Growth has been re-established in some places but not in others, requiring significant amounts of performance-enhancing policy to keep things from getting worse.

It is this combination of circumstances that led some observers back to the secular stagnation argument. Former U.S. Treasury Secretary Larry Summers has been the most vocal adherent, but economists from around the world have joined him.

Robert Gordon of Northwestern University has highlighted troublesome trends on the supply-side of the economy. Potential growth is often described as the sum of labor force expansion and increases in productivity. On both of these fronts, many world economies are struggling.

The demographic challenge faced by many developed countries is well-documented. Increased living standards and the entry of women into the workforce have both served to depress birth rates. Sizeable post-war generations are gradually moving into retirement, reducing labor force participation. Projections from the International Monetary Fund suggest that the size of the workforce in many nations may struggle to show any growth over the next 20 years.

Further, older populations are more risk-averse and less innovative. This may be contributing to the clear downward trend in the rate of productivity growth, which had averaged around 2 percent annually in the United States and double that level in Europe over the decades prior to the Great Financial Crisis. More recently, productivity has been advancing modestly. Soft productivity growth makes labor less valuable and increases the challenge of reaching full employment.

Gordon points to advancing income inequality as another factor limiting global consumption. The propensity to spend declines with earnings levels, so in his view, bolstering incomes among society’s lower quintiles could add importantly to demand.

Strong aggregate demand is always helpful. But the best policy for the moment on this front might be patience. The balance sheet repair necessitated by the Great Financial Crisis is gradually becoming less of a limiting factor and should continue to improve in the years ahead.

If secular stagnation is truly upon us, the consequences could be severe. Standards of living and asset values might regress. Limited economic mobility would add fuel to political uncertainty. Debtors could struggle to meet their obligations.

But we’ve heard these jeremiads many times in history, and they’ve yet to come true. Populations tend to find a way to be resourceful, and there is no reason to think they won’t continue to operate this way.

My daughter redeemed herself when I returned from my battle against the elements. Much to my surprise, she had looked up secular stagnation on the Internet, and she had formulated a proposal to deal with the issue. “Buy a snow blower,” she said. “Investment in technology is the key to boosting potential output.” For a moment, I was a very proud papa.

Carl Tannenbaum is senior vice president and chief economist at Northern Trust Corporation and a member of ABA’s Economic Advisory Committee.

ShareTweetPin

Related Posts

New home sales rose in June

New homes sales edge up in October

Economy
January 13, 2026

Sales of new single-family houses in October 2025 were at a seasonally adjusted annual rate of 737,000, according to estimates released jointly today by the U.S. Census Bureau and HUD.

CPI rose 0.4% in March 

CPI increases in December

Economy
January 13, 2026

The Consumer Price Index increased 0.3% in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported. Over the last 12 months, the all items index increased 2.7% before seasonal adjustment.

Consumer prices steady in December

Consumer prices steady in December

Economy
January 13, 2026

The ABA Office of the Chief Economist believes the most recent reading supports the notion that inflation has not reaccelerated, providing some additional flexibility for the Fed to support the labor market. For banks, this could bolster credit...

ABA DataBank: Heavy truck sales slump

ABA DataBank: Heavy truck sales slump

Economy
January 9, 2026

Heavy truck sales have historically served as a reliable leading indicator of an economic slowdown.

Senate Banking Committee unveils bill to accelerate housing construction

Housing starts fall in October

Economy
January 9, 2026

Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,412,000. This is 0.2% below the revised September rate of 1,415,000 and is 1.1% below the October 2024 rate of 1,428,000.

Consumer Sentiment declined in April

Preliminary: Consumer sentiment increased 1.1 points in January

Economy
January 9, 2026

Consumer sentiment increased 1.1 points month-over-month in January to 54.0, down 17.7 points from one year ago, according to preliminary results of the University of Michigan Surveys of Consumers.

NEWSBYTES

G7 expert group releases cybersecurity ‘roadmap’ for post-quantum cryptography

January 13, 2026

New homes sales edge up in October

January 13, 2026

CPI increases in December

January 13, 2026

SPONSORED CONTENT

Seeing More Check Fraud and Scams? These Educational Online Toolkits Can Help

Seeing More Check Fraud and Scams? These Educational Online Toolkits Can Help

November 1, 2025
5 FedNow®  Service Developments You May Have Missed

5 FedNow® Service Developments You May Have Missed

October 31, 2025

Cash, Security, and Resilience in a Digital-First Economy

October 20, 2025
Rethinking Outsourcing: The Value of Tech-Enabled, Strategic Growth Partnerships

Rethinking Outsourcing: The Value of Tech-Enabled, Strategic Growth Partnerships

October 1, 2025

PODCASTS

Podcast: The incredible shrinking penny (circulation)

January 8, 2026

Podcast: Cybersecurity in a mobile-first banking landscape

December 18, 2025

Podcast: The 2026 outlook for bank M&A

December 11, 2025

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2026 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2026 American Bankers Association. All rights reserved.