To this list of reasons for the slow recovery – the effects of the financial crisis, problems in the housing and mortgage markets, weaker-than-expected productivity growth, and events in Europe and elsewhere – I would add one more significant factor – namely, fiscal policy.
As I said yesterday in New York in the context of global imbalances, we now see examples of industrialized countries following policies that impede market forces—for example, restrictive labour policies in Europe. We have also seen unsustainable fiscal policies here in the United States. In Canada, we still have restrictions on foreign ownership of firms in certain sectors.