A disquieting phrase has entered our economic lexicon: "new normal." The "new normal" economy that emerges from our recovery, many economists fear, won't look like the old normal, the American economy of the past couple of decades. It will look worse.
This is not, after all, a normal recession but a recession prompted by a banking meltdown. To gauge what that means for a recovery, consider the conclusions of a recent International Monetary Fund report that looked at 88 banking crises around the world over the past four decades. It found, on average, that seven years after these crises, the economic output of the affected nations was still 10 percent below what it would have been had the crisis not happened.