The “new normal” may be new. It’s hardly normal.
The “new abnormal” would be more apt, according to reports published this month by Ed Yardeni of Yardeni Research Inc. in New York and ING Bank NV’s Mark Cliffe in London.
“Dictionaries define ‘normal’ as regular, usual, healthy, natural, orderly, ordinary, rational,” Cliffe said Nov. 7. “It is hard to use those words to describe the current performance of the world economy and financial markets.”
Among signs of irregularity since Pacific Investment Management Co. popularized the expression “new normal” in 2009 to describe an environment of below-average economic growth: Central banks are still deploying near-zero interest rates or quantitative easing six years after the financial crisis, yet output, inflation, business investment and wages remain mostly subpar.
In financial markets, equities are hitting new highs as bond yields probe new lows. Even as the U.S. shows signs of strength, commodities are slumping.
The lesson for Yardeni is that by running to the rescue every time asset prices swooned in the past two decades, central bankers’ prescriptions distorted economies.