The Lost Decade: American Edition


Another Lost Decade?

By Eric Fry


01/05/10 Laguna Beach, California – In today’s edition of The Daily Reckoning, we turn our attention to the “Decade of No Returns” – aka, the “Lost Decade.” Students of recent financial history may recall that our friends over in Japan have already logged a couple of “lost” decades. Japanese workers still punch time clocks every day, but the national economy barely seems to notice. Meanwhile, the Nikkei Index has surrendered 73% of its value during the last twenty years.

Here in the States, things are a little bit better. We’ve only lost ONE decade so far…

The S&P 500 Index posted a total return of MINUS 9% during the first ten years of the new millennium. And THAT was the “strong” index. The NASDAQ Composite tumbled 40% during the same 10-year span.
Stocks are not exactly synonymous with economic vitality, of course. And we know that US GDP increased during the decade. So maybe the US economy isn’t as lost as the stock market suggests. But based on the nearby chart, the economy looks so disoriented that no GPS device on the planet could lead it back to the path of productivity. In terms of job creation, the last 10 years were a complete bust.

US Lost Decade

Despite an abysmal 10-years of zero wealth creation and zero job growth, betting on a second consecutive Lost Decade seems like a bad wager. And yet, it happened in Japan…