The Global Economy in Turbulent Times

CHAPTER 27 The “New Normal”¹

I particularly like the annual Per Jacobsson Lecture. Per was the managing director of the International Monetary Fund (IMF); he died in May 1963. In September 1963, I joined the IMF, where I remained for about a year. Per’s long shadow dominated its work, starting with the creation of the Finance Committee of League of Nations working alongside Sir Arthur Salter, Maurice Frere, and Jean Monnet. At the annual meetings of the IMF/World Bank, the Per Jacobsson Lecture is delivered by the very best from anywhere in the world to share their experiences and beliefs. Last October, Mr. Mohamed El-Erian spoke on “Navigating the New Normal in Industrial Countries.”² He is the chief executive officer and co-chief investment officer of PIMCO, the world’s largest bond fund manager.

New Normal for the United States

Mr. El-Erian coined the term “new normal” in 2009, which has since become widely used. It now means many different things to many different people. Indeed, it has spawned applications in almost every field: in technology (referring to its transformative power), lifestyle (US women getting fatter); medicine (early puberty in girls); management (constant change); higher education (less state financial support); the new rich (show-off its purchasing power); the Internet (new mind-sets for innovation); and so on.

For El-Erian, the economic crisis of 2008 changed everything. He used the new normal to codify for the United States a new era of slower growth ...