Speed Limits Ahead

As U.S. economic activity faltered during the second half, fears increased that the economy could dip back into recession or see a prolonged period of subpar growth. Alan Levenson, chief economist at T. Rowe Price, argues that the quick U.S. policy response will prevent a "lost decade" in the U.S. similar to Japan's experience in the 1990s. Still, there are plenty of reasons to expect the economy's growth to remain constrained. Kevin Logan, chief U.S. economist at HSBC, notes that U.S. households' debt-to-income ratio is still considerably higher than it was prior to the housing bubble, and consumer spending isn't likely to revive fully until that ratio drops. And economist Asha Bangalore of Northern Trust points to banks' wariness about lending as a major restraint on growth.

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