New Normal Becomes Old Normal as Exports Propel U.S. Recovery

(Business Week – Rich Miller, Bloomberg)

The “new mix” is out to topple the “new normal” as the paradigm for America’s economic future.

The 5.9% annualized surge in fourth-quarter growth – the fastest since 2003 – was powered more by exports and business investment than the traditional drivers of consumption and housing. This new mix of demand will boost the economy by 3.7% in 2010 and pave the way for 3.5% annual average increases thereafter, said Joseph Carson, an economist at AllianceBernstein in New York, who coined the phrase.

His forecast contrasts with the 2% rate penciled in for later this year and the longer term by new-normal proponent Mohamed El-Erian, chief executive officer of Newport Beach, California-based Pacific Investment Management Co., who argues that growth will be depressed by consumer retrenchment and financial regulation. “What’s going to change is how we generate growth, not how fast we can grow,” Carson said in an interview. “That’s how I come up with a new mix rather than a new normal.” Read more here.