Comment of the Day: I have never understood this belief in "snapback". Previous "snapbacks" had all taken place in the context of the Federal Reserve driving the real interest rate far below the Wicksellian neutral rate and a supportive fiscal policy. Neither of those were present. Where was snapback supposed to come from after 2009?: Charles Steindel: : "It was a belief that the recession was primarily the result of the collapse of the financial system...
...With the system restored (presumably by the stress test reviving confidence that the remaining institutions were viable), then, the argument was that the economy would snap back to normal, or at least there would be period of clear above trend growth. The removal of the fiscal stimulus, the continued stress on state and local governments, and the catatonic state of housing were not sufficiently taken into account...
