When the Chinese New Year falls next month, it will become the year of the monkey, though, to date, 2016 has without doubt been all about the bear. Stock markets are feverish, the Chinese slowing economy is thought to be weaker than official statistics suggest and there’s widespread jumpiness about the US Federal Reserve’s decision to raise interest rates. From a UK perspective, this downbeat mood doesn’t neatly tally with our domestic scene. Sure, some forecasts have been notched downwards, but growth is steady. Employment is at a record high. Wages are sluggish but rising.

But look back over the past decade and things start to look different. There has been no surge in GDP as would normally be expected following a deep recession; the decline in pay has been extraordinary; productivity has been comatose. Indeed, 2016’s market volatility has so captured the economic zeitgeist in part because there is already an underlying angst about the medium term growthoutlook for advanced economies – including the UK.

Growth gloom is a booming niche industry. The Rise and Fall of American Growth, a landmark new book by venerated economist Robert Gordon, argues that the US experienced a “special century” from 1870-1970. We’ve never experienced anything like it before or since. US GDP rose by 2.7% a year between the Second World War and 1970, but slipped to 1.4% from then to 2015. Gordon now forecasts it will bump along at just over 1% in the years to 2040. Which isn’t to say that there won’t be all manner of inspirational innovations, just that, the argument goes, they’ll be far less consequential in terms of productivity and emerge in an era defined by stiff headwinds against growth.

There are a variety of such factors. Last week, Gertjan Vlieghe of the Bank of England’s monetary policy committee, talked about a new relationship between growth and interest rates, highlighting that the world has changed due to three Ds: debt, distributions and demographics. Debt matters as the overhang built up pre-crisis appears to have acted as a drag on household consumption. Distribution matters as there is growing evidence of a link between highlevels of inequality and slow growth. And demographics matters as advanced economies are ageing – as are important emerging ones – , which raises dependency ratios, which may drag down on growth.

For many, however, the immediate concern comes in the form of a fourth D: demand. Leading this field is the notion of secular stagnation put forward by former Obama adviser Larry Summers. His central contention is that interest rates, already at rock bottom, can’t fall low enough to generate the levels of investment needed to grow the economy in line with its potential.

Demographic forces are powerful, but they aren’t destiny

A key conclusion is that the forces propelling growth in countries such as the US and UK of late have been unsustainable: over-reliance on an accelerating supply of credit pre crisis, dependence on unconventional monetary policy post crisis. Nearly eight years since Lehman’s collapse, policy-makers still worry about how to sustain growth.

Yet growth gloom can be overdone. Guarded-optimism, or at least scepticism over undue pessimism, also has powerful arguments in its favour. For every doubter about the growth impact of new technologies, there are at least as many believers in the vast and largely unmined potential of robotic, digital and low-carbon innovations that are yet to show up in our productivity statistics. To judge the economic prospects of the next generation by our record over the last one is to walk backwards into the future. As for talk of a new debt bubble, it’s sometimes, well, a bit frothy: UK household debt relative to income has fallen since the crisis and predictions of a steep rise in it have repeatedly failed to materialise. The potential issue of real concern – the burden of debt repayment facing exposed high-leveraged low- and middle-income households – still remains. But it’s a downgraded risk as wages rise and expectations about rate rises are pushed off into the more distant future.

When it comes to inequality, it’s true that the UK appears near the top of the OECD league-table. Yet it’s far from obvious that inequality is likely to be responsible for downgrading current growth prospects – particularly in a country like the UK, where standard income measures of the gap between rich and poor have been broadly flat for decades. (Though the same can’t be said about wealth inequality which is now rising.)

Demographic optimists argue that the flattening of working-age populations will eventually tilt bargaining power back towards labour and away from capital for the first time in generations, boosting wages and, eventually, lifting capital investment that in turn should support growth. Female participation could rise, as it has in Japan, offsetting the fall in employment. Demographic forces are powerful, but they aren’t destiny.

All told, it’s a finely balanced debate. Only the truly sanguine, however, would take current headwinds lightly. There are certainly sufficient grounds to jolt us out of any lingering 20th-century belief that we are predestined to enjoy long stretches of healthy growth of 2-3% punctuated by occasional recessions – with the essential economic question being how to minimise the likelihood and severity of these cyclical downturns.

What if the pessimists are more right than wrong and we’ve emerged from the trauma of the financial crisis to discover that for a number of deep-seated reasons “normal” growth just isn’t what it used to be? All manner of social as well as economic consequences would follow. We know that economic malaise provides fertile ground for political populism, protectionist sentiment, hostility to migrants and a temptation to engineer competitive advantage via competitive currency devaluation. A UK slow down would also bring sagging tax revenues and rising spending pressures meaning, as the OBR has shown, that contrary to the Chancellor’s target we’d still be living with a deficit into the 2020s.. The absence of a growth dividend would further erode the prospects for any renewal of redistributive politics and sharpen the zero-sum nature of our fiscal choices.

It would be even more likely that interest rates will be stuck at extremely low levels for the rest of the decade and beyond. Distributional and generational consequences would result.Debtors and home-owners win; savers and renters aspiring to buy lose. Already, poor investment returns would be further eroded, eating into projected retirement incomes and spurring yet higher employment rates among older workers. Existing pension deficits would grow bigger still, as would pressure for higher pension contributions from today’s workers, both bearing down on pay especially for the young.

Conventional policy wisdom would need to adjust. Come the next economic downturn – which history suggests may be with us by the end of the decade –, fiscal policy would need to take far more of the strain. Indeed, this risk makes the case for the Bank of England moving to a higher inflation target to help ensure that, over time, monetary policy can again share the burden. Sluggish growth in an ever longer era of very low borrowing costs should make an irresistible case for a powerful resurgence of public investment. The gains from new infrastructure – housing, transport, flood defences, renewables – would dwarf the cost; the case against borrowing for these purposes would become ever more threadbare. Inaction would be inexcusable.

Whether sustained slow growth comes to pass remains unknown. For now, the UK, relatively speaking, is in reasonable shape. But our current leaders have no plan if the pessimists are proved right. The palpable desire to declare “mission accomplished” as we embark on the long road back to normal fiscal and monetary conditions will have to remain on hold. And if the headwinds blowing against growth are as strong as some fear, then our collective sense of what’s normal – politicians and voters alike – is going to have to change.

Gavin Kelly is chief executive of the Resolution Trust