IF AMERICA'S ECONOMIC LANDSCAPE seems suddenly alien and hostile to many citizens, there is good reason: they have never seen anything like it. Nothing in memory has prepared consumers for such turbulent, epochal change, the sort of upheaval that happens once in 50 years. That may explain why so many voter polls, taken as the economy shudders toward the November election, reveal such ragged emotional edges, so much fear and misgiving. Even the economists do not have a name for the present condition, though one has described it as "suspended animation" and "never-never land."
The outward sign of the change is an economy that stubbornly refuses to recover from the 1990-91 recession. In a normal rebound, Americans would be witnessing a flurry of hiring, new investment and lending, and buoyant growth. But the U.S. economy remains almost comatose a full year and a half after the recession officially ended. Unemployment is still high; real wages are declining. At a TIME economic forum last week, forecasters predicted that U.S. growth would amount to only 1.8% this year and 2.6% for 1993, about half the speed of a normal recovery. The current slump already ranks as the longest period of sustained weakness since the Great Depression.
That was the last time the economy staggered under as many "structural" burdens, as opposed to the familiar "cyclical" problems that create temporary recessions once or twice a decade. The structural faults, many of them legacies of the 1980s, represent once-in-a-lifetime dislocations that will take years to work out. Among them: the job drought, the debt hangover, the defense-industry contraction, the savings and loan collapse, the real estate depression, the health-care cost explosion and the runaway federal deficit. "This is a sick economy that won't respond to traditional remedies," said Norman Robertson, chief economist at Pittsburgh's Mellon Bank. "There's going to be a lot of trauma before it's over."
How to fix the broken parts of the economy has not only become a central issue of the presidential campaign but is also likely to stand as Topic A for much of the 1990s. Quick fixes will not work, a point that many Americans seem to be accepting. In fact, that is the light at the end of the tunnel. "A lot of good things are going on underneath the surface that will actually work very well for us two and three years out," said Allen Sinai, chief economist for the Boston Co. Economic Advisors.
Until earlier this year, the U.S. seemed to be headed for a more normal rebound, thanks to the brisk tempo of export sales. But then the economy began to suffer from yet another new development: America's growing linkages to the global economy, which has gone into a slump. The world's economy didn't grow at all last year, and is expected to expand only 1.1% this year. The currency crisis that swept Europe last week was a profound symptom of the West's stagnation. Germany's relatively high interest rates, run up by the cost of rapid unification, have prevented its major trading partners -- including to some extent the U.S. -- from lowering their own rates enough to boost their economies.