But this does not mean that it could not remain low for a time (or even go lower temporarily) while the economy is recovering. This is, in fact, what we would expect to happen if significant numbers of households decided to cash in some of their accumulated financial assets in order to spend. Third, the high unemployment rate.
This argument sounds like a "Catch 22": the high unemployment rate discourages people from spending, which keeps unemployment high, which discourages spending still more. I believe that this grim picture overstates the problem, given that over 90 per cent of the workforce is employed. And yes, there are still cutbacks and layoffs, especially in the public sector. However, private sector employment continues to expand.