By Isaac Cohen*
As in theology, there are also mysteries in economics. The difference is that in theology there is a Supreme Arbiter who can ultimately solve any mystery, while many economic mysteries remain unsolved.
For instance, for the first time since the Great Recession of 2008, the most advanced economies are growing moderately. However, some of them, such as Germany, Japan and the United States, are close to full employment, but inflation remains below the central bank targets. In the United States, for five years inflation has remained below the 2 percent target. In Japan inflation remains close to zero and in the Euro zone it is also below 2 percent. Federal Reserve Chair Janet Yellen recognized that understanding of inflation is “imperfect” and described this year’s fall in prices as a “mystery.”
There are more mysteries. After the Great Recession, there is worldwide evidence of a slowdown in productivity, despite spectacular advances in innovation and technological change, in sectors such as information technology and energy. Also, perhaps related to the slowdown in productivity, wages have increased slowly, despite the strength in labor markets and almost full employment.
Even so, there has been some progress in recent years. The Federal Reserve revealed the net worth in 2016 of an average family in the United States was $97,300, an increase of 16 percent adjusted for inflation from 2013. However, those benefits were concentrated, because half of all households in the United States in 2016 had lower incomes than in 2000.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media. Former Director, UNECLAC Washington.
