William J. Holstein

The Restructuring of the U.S. Economy--the Economists Still Don’t Get It
JUNE 17--An article in the Wall Street Journal says that there is a sharp divergence emerging in the U.S. economy, with housing stumbling and the industrial sector booming.

Divergence? This is what has to happen as part of the structural change of our economy. We are not going back to what we had before. There is not going to be a turn in the business cycle that makes everything the way it was three or four years ago. That model is gone.

Perforce, sectors of the economy that depend on consumer spending (retail sales, auto sales, housing) are going to trend downward over time, and the sectors of the economy that depend on innovation and manufacturing are going to become increasingly important. The article correctly quoted economist Joe Carson as waying: "What's taking place is a change in the sources of U.S. growth." He, at least, has got it right.