Today's Coming Crisis Movie

Friday, June 17, 2011

America's own 'Lost Decade'

The economy is still struggling. And Americans are in for a long and painful adjustment period.

One major reason: their own household debt.

Many experts say private debt owed by households, as well as businesses, is an even bigger problem than the government debt that's getting so much attention lately. And it won't be solved without a difficult stretch of high unemployment and slow growth that will likely last for six or seven more years, producing America's own version of Japan's "Lost Decade."

"I think it's one of the major headwinds we're fighting against right now," said David Wyss, a visiting fellow at Brown University and former chief economist at Standard & Poor's.

Following a real estate bust that hit Japan in the 1990s, the economy fell into a prolonged period of economic stagnation that lasted for years and became known as the country's 'Lost Decade.'

In the U.S., the situation is shaping up to be similarly stubborn. (read more)