Recent developments have only reinforced our long-held belief that the economic recovery will remain unusually lacklustre for several more years. We now expect GDP growth of just 1.5% in 2012 and 2.0% in 2013. Only when the structural problems created by the collapse of the housing bubble and the financial crisis are finally resolved will the recovery gather any real head of steam. In the meantime, the low baseline for GDP growth will leave the economy more at risk of slipping back into a recession over the next few years.
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