Why the Slow Recovery?

“In other advanced economies, higher personal savings and greater reliance on export earnings created expectations of more rapid economic recovery,” Judge Richard Posner explains. While Posner laments the Obama administration’s economic agenda, he explains the slow recovery more in terms of America’s lack of personal savings relative to other developed countries. “The crash of 2008 ushered in a protracted period of stagnant consumption spending as frightened American consumers increased their personal savings rate from 1.7 percent three years ago to 6.4 percent today. Producers and distributors in the third quarter of 2008 and in 2009 could foresee a sustained period of subpar demand, and so laid off many workers and have been slow to rehire them.”