Forget V- and U-shapes, economist Robert Reich said.
Recovery isn't going to happen, period.
The economy can't “recover” because it can't go back to where it was before the crash, Reich said. So, instead of asking when the recovery will start, we should be asking when and how the new economy will begin, he said.
What will the new economy look like? Nobody knows, Reich said.
“This economy can't get back on track because the track we were on for years — featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere — simply cannot be sustained,” Reich told The Market Oracle.
“In a recession this deep, recovery doesn't depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy,” he said.
“Until consumers start spending again, you can forget any recovery.”
The problem, Reich said, is that consumers won't start spending until they have money in their pockets and feel reasonably secure, and it's hard to see when that might happen.
“Those who can are saving,” Reich said. “Those who can't are hunkering down, as they must.”
Some of the world's leading economies showed tangible improvement in May, according to the latest leading indicators, the Organization for Economic Cooperation and Development reported. This suggested that many major economies, including the U.S., the euro zone and China, could end their declines later this year.
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