Economy

And here’s the thing: The same logic that predicted sluggish recovery from the last big slump points to a much faster recovery this time around — again, once the pandemic is under control.

What held recovery back after 2008? Most obviously, the bursting of the housing bubble left households with high levels of debt and greatly weakened balance sheets that took years to recover.

This time, however, households entered the pandemic slump with much lower debt. Net worth took a brief hit but quickly recovered. And there’s probably a lot of pent-up demand: Americans who remained employed did a huge amount of saving in quarantine, accumulating a lot of liquid assets.

Paul Krugman might be right or maybe wrong. Only time will tell. I do worry a bit about inflation putting a damper on the economy in the coming years - all that money that has been spent in recent years by the federal reserve and the government has to go somewhere.