The combination of lingering high unemployment, record high consumer and business debt leverage, record federal budget deficits, and ongoing budget challenges in numerous states and municipalities creates a vexing chicken-and-egg problem for sustained economic recovery. The result will likely be years of gross domestic product growth in the low single digits.

In the downward leg of a recession, debt growth and government spending are generally important measures to halt economic decline and jumpstart the recovery cycle. The acceleration of debt growth has been a major driver in most post-recession recoveries as the nation essentially borrows its way back to economic growth. Once the effects of debt growth and government spending take hold, employment growth generally ensues and takes over to support a self-sustaining growth phase. As a result, employment generally tends to be a lagging indicator.

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