John Cochrane presents a good point:
But we’ve heard the defense over and over again: “recoveries are always slower after financial crises.” Most recently (this is what set me off today) in the Washington Times,
Many economists say the agonizing recovery from the Great Recession…is the predictable consequence of a housing market collapse and a grave financial crisis. … any recovery was destined to be a slog.
“A housing collapse is very different from a stock market bubble and crash,” said Nobel Prize-winning economist Peter Diamond of the Massachusetts Institute of Technology. “It affects so many people. It only corrects very slowly.”This argument has been batted back and forth, but a new angle occurred to me: If it was so obvious that this recovery would be slow, then the Administration’s forecasts should have reflected it. Were they saying at the time, “normally, the economy bounces back quickly after deep recessions, but it’s destined to be slow this time, because recoveries from housing “bubbles” and financial crises are always slow?”
No, as it turns out…
You will find further background here. That said, my read on this is quite different than Cochrane’s. He blames post-crash policy, whereas I blame (mostly) “The Great Stagnation.”