The New Normal is so last year; the New Abnormal is here.
At least that’s how it seems based on how often this phrase is being applied to trends and phenomena that appear jarring or strange but which – the coiners suggest – we'd better get used to.
The New Normal, of course, was a phrase propagated by bond-investing giant Pimco beginning in April 2009 to describe a long, painful economic convalescence period it foresaw, characterized by stubbornly slow economic growth and persistently high unemployment in an aging world carrying too much debt.
And so it happened: The U.S. recovery has steadily fallen short of hopes and official forecasts, surpassing a 3% pace in only three separate quarters since 2008. Treasury rates – near 3% and rising when Pimco christened the New Normal – have stayed so low, due to sluggish growth and massive central-bank bond buying, that the recent pop to 2.2% from 1.7% has unsettled investors.
A stale status quo
This New Normal rubric has done such a good job explaining the post-crisis environment that, perhaps, it now feels like a stale status quo – something fast on the way from “the way things are” to “the way things were.”
A Google Trends tabulation shows the phrase “the New Abnormal” hit peak search volumes in April, from zero in late 2009. In recent weeks, commentators in varied fields have tried to declare and describe such a societal condition.
Political scientist Ian Bremmer and economist Nouriel Roubini, in the new edition of Institutional Investor magazine, make the case for a financial and geopolitical New Abnormal. This backdrop, they say, will be marked by a prolonged stretch of “global uncertainty and instability,” under which assumptions about emerging-market economic growth and the ability of central banks and governments to steer toward acceptable long-term policies will be upended.
“Some believe U.S. lawmakers can now afford to postpone tough choices, the Europeans can muddle through, China can smoothly rebalance its economy, and fires in the Middle East can be left to simply burn themselves out," write Bremmer and Roubini. "These are dangerous illusions.”
Through a narrower lens, film producer and author Lynda Obst has written a new book, “Sleepless in Hollywood,” that posits a New Abnormal governing the moviemaking business. Here, with studios heavily reliant on foreign audiences to deliver the profits needed to sustain them, easy-to-export superhero-driven blockbusters are pursued to the near-exclusion of the familiar mid-list human-scale picture. As Obst noted in a Daily Ticker interview last week, writer-driven dramas and comedies are now almost entirely the province of cable TV and low-budget independent cinema.
The Centers for Disease Control has seized on the New Abnormal imagery to highlight the way average portion sizes of fast-food drinks and processed-food products have ballooned in recent years, propelling meal-calorie counts skyward and driving widespread obesity.
Climate experts have lately deployed the phrase in raising alarm over patterns of more-frequent “superstorms” and the like. In a somewhat less grave approach to this topic, the comedy-news show "The Colbert Report" headlined a segment about new weather-map colors in Australia used to depict ultra-high temperatures: The Word – The New Abnormal.
This evident outbreak of "new abnormalcy," so to speak, suggests something afoot in cultural psychology aside from its usefulness as a phrase that plays upon a more established concept. How to strike a contrast with the familiar, if uneasy, New Normal period, when to most of the public the world hasn’t returned to what used to be considered normal? Thus all the efforts to usher in New Abnormals, left and right.
For investors, this sentiment is a symptom of a general unease with what might follow the post-crisis period, in which the cycle of financial shock, market panic, central-bank easing and market pacification settled into an unsatisfying but unexciting calm (for now). The intense jumpiness of investors about subtle, incremental expected changes in Federal Reserve policy highlights the related belief that the market appreciation and economic recovery are somehow artificial and fragile.
Add to this the stresses of fast technological change, upended business models, destabilizing global capital flows and demographic headwinds, and perhaps the public reluctance to trust that the New Normal will give way to something more reassuring is understandable.
It remains a contrarian position that the extraordinary policy response, economic healing and pent-up innovation of the past few years will result in real and enduring improvement in growth and prosperity. Like all contrarian positions, there remain good reasons to dismiss it.
Whether the New Abnormal or not, some other state-of-being is due to dawn. Not only did Pimco’s New Normal co-elucidator Mohamed El-Erian say early this year that this period might be ending, but NBC’s sidelong effort to co-opt the phrase for a sitcom called "The New Normal" was canceled last month – after a single unfunny season.
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