Suddenly, everyone is in a panic. Housing prices are falling, stock prices are falling, and businesses are not hiring. Is anyone surprised? Stocks are overpriced, based on the average dividend yield, and corporate profits are inflated by rising government debts which allow businesses to pay less and sell more. Younger generations are worse off than those who came before, as a result of the decisions of those who came before, and will have to pay less for housing. And corporate executives have had basically one idea for the past 15 years — move production to lower wage countries, and then sell the resulting product to Americans. Who came up with the money by borrowing until they were broke, and the government stepped in to postpone the collapse of the economy until it is broke. The executives paid themselves richly for that one idea. They have yet to come up with another one.
You want a booming economy? Look at this chart. We'll have a booming economy when our debts are back to normal levels. Optimistically, that will take a decade. Pessimistically, we're Japan or Weinmar Germany.
And by the way, public official’s expectation of the rate of return on retirement assets, and people’s planning for their own retirement, had better reflect this reality.
There was a secular bull market from 1982 to 2000 that ended in a bubble, following a secular bear market from 1966 to 1982 that ended with stocks much cheaper relative to earnings and dividends than they are today. The period from 1982 to 2000, or even 1982 to 2011, is not a real long term trend. Try 1929 to 2000, or 1933 to 2009 instead.