An undemanding recovery

By Economist.com

Post-recession demand has bounced back more slowly than usual in rich countries

IT HAS taken four years for domestic demand across the OECD, a rich-country club, to return to its level at the height of the recession—far longer than previous recoveries, according to the organisation's latest Economic Outlook. The report, released this week, blames the usual suspects for sluggish growth: uncertainty, fiscal consolidation and the ongoing euro crisis. It notes that the boost to the Japanese economy from reconstruction after the Fukushima disaster is fading. And in euro-zone countries (which are all, bar Cyprus and Malta, part of the OECD) higher taxes and economic uncertainty have hit demand for durable goods like fridges and furniture particularly hard. Car sales, for instance, fell 23% in the third quarter compared with the same period last year. The other side of the Atlantic may offer hope in 2013, though. American households, some of which will be pulled out of negative equity by rising house prices, are likely to save a bit less and spend a bit more.