The Trump normal

Three months after Barack Obama was sworn in as president in 2009, Mohamed A. ElErian, then the Chief Executive Officer of PIMCO and a past deputy director of the IMF, popularized “the new normal,” a term to describe the protracted, low-growth era that the economies of the Western world were then entering. Impressed with his prescience, Obama in 2012 would make El-Erian the first chairman of the White House’s Global Development Council.

“The new normal” became the received wisdom of the left and numerous others to explain the failure of the Western economies to bounce back after the Great Recession of 2007-8. The Reagan recovery following the early 1980s recession saw U.S. GDP leap by 7.5 per cent in 1984, en route to average growth of 4.8 per cent over six years. The Obama years never once managed GDP growth of three per cent, eking out instead a post-recession GDP average of just 1.5 per cent per year. Obama not only presided over the worst recovery since the Great Depression, he is the only president since the Second World War to log an uninterrupted string of low growth. To the left, this was an affirmation that a new normal had arrived, especially since the rest of the West also performed dismally.

The developed world was facing a “new mediocre,” stated IMF Managing Director Christine Lagarde in 2014. Larry Summers, a former U.S. Secretary of the Treasury, called the coming era “secular stagnation.” Neither is a mere three per cent growth, the pre-Obama normal. “To get the economy back on track, President Trump has outlined a bold plan to create 25 million new American jobs in the next decade and return to 4 per cent annual economic growth,” the White House announced to an incredulous press on the day that Trump was sworn in as