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The most worrisome aspect about our current slump is that it combines obvious short-term problems — from the financial crisis — with less obvious long-term problems. Those long-term problems include a decade-long slowdown in new-business formation, the stagnation of educational gains and the rapid growth of industries with mixed blessings, including finance and health care.
Together, these problems raise the possibility that the United States is not merely suffering through a normal, if severe, downturn. Instead, it may have entered a phase in which high unemployment is the norm.
"In the midst of a steep recession, when it’s all too easy to fixate on dramatic, cyclical events, there’s real danger of losing sight of deeper trends. Strictly cyclical thinking risks discounting or even ignoring powerful forces of long-term change. To provide a clear, comprehensive, and sustained view of the deep dynamics changing our world, Deloitte's Center for the Edge has developed a Shift Index consisting of three indices and 25 metrics designed to make longer-term performance trends more relevant and actionable."
Popular fears that America is an empire in decline rise and fall with the business cycle -- or, more recently, the bubble cycle. One can only hope that, as the economy recovers, the surfeit of excited comparisons between the United States and ancient Rome will dissipate, allowing more sober assessments of America's future to take center stage. In a recent book, Why America is Not a New Rome, I observed that American decline after 1945 was inevitable, but that the US trade deficit and the significant relative retreat of manufacturing were not. This essay takes a closer look at the rapid decline of American manufacturing in comparison to other wealthy nations, challenges the reasons given for why Americans need not worry, and argues that for the United States to overcome its economic straits it must increase its export of manufactured goods.
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