"The economic collapse in the wake of the global
financial crises (GFC) and the weaker-than-expected recovery in many countries
have led to questions about the impact of severe downturns on economic
potential. Indeed, for several major economies, the level of output is nowhere
near returning to pre-crisis trend (figure 1). Such developments have resulted
in repeated downward revisions to estimates of potential output by private- and
public-sector forecasters. In addition, this disappointment in post-recession
growth has contributed to concerns that the U.S. economy, among others, is
entering an era of secular stagnation. However, the historical experience of
advanced economies around recessions indicates that the current experience is
less unusual than one might think. First, output typically does not return to
pre-crisis trend following recessions, especially deep ones. Second, in
response, forecasters repeatedly revise down measures of trend."
