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Is the U.S. Economy Too Built on Growth?

In general, economies grow at some times, and not others. More often than not, there have been speed bumps along the way. These aren't bad things if they end of being the "pause that refreshes." More to the point, they allow for mid-course corrections.

Unfortunately, a lot of America's economic institutions have been built on the theory of relentless, never-ending growth. Housing was one example. Prices in this key sector grew at double digit rates for the better part of the decade around the turn of the century. This was cheered, because price growth was supposed to be the cure for defaults. If prices continually kept rising, there would be no incentive to default; at worst, a non-paying situation could be "worked out."

The dependence on growth was illustrated by one salient fact. If price growth merely reverted to historical levels (mid single digits) default rates would double. If it went to zero, or worse, reverse, losses would skyrocket. Yet practically no one connected with the industry around 2005-2006 could imagine such a scenario, even though it was part of the historical record.

Hoping for good growth is one thing. DEPENDING on it is quite another.  The latter makes it like a drug. And when it ends, the "withdrawal pains" are likely to be quite painful