PIMCO CEO Mohamed El-Erian took to the pages of The Washington Post Monday to rebut (sort of) the use of the term “new normal” by Mitt Romney’s vice-presidential pick, Rep. Paul Ryan, to decry the current economic situation.
“I hear some people say that this is just ‘the new normal,’” Ryan said upon being introduced by Mitt Romney on Saturday. “High unemployment, declining incomes and crushing debt is not a new normal. It’s the result of misguided policies.”
Ryan, R-Wis., is both right and wrong, according to El-Erian, who coined the term “new normal” with PIMCO founder Bill Gross to describe a world of stagnant growth and lower returns in the wake of the global financial crisis of 2008.
“Understanding the difference is essential if his follow-up prediction—that ‘next January, our economy will begin a comeback’—stands any chance of materializing regardless of who prevails in November,” El-Erian, who has a close personal relationship with Michelle Obama, writes.
Ryan is correct that the new normal is a result of “misguided policies,” El-Erian concedes, “Although we have different definitions of misguided.”