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As the U.S. economy slouches toward another recession and confidence in policymakers erodes, investors are coming to grips with the notion that the country may already be several years into a Japan-style lost decade.
If so, the years ahead could be a very tough slog. U.S. households, unlike those in Japan, have higher debts and lower savings, while massive deficits have sapped political support for the type of robust government spending Japan relied upon.
In short: in a prolonged period of anemic growth, the U.S. economy may have a slimmer margin for error.
"I'm more convinced we are headed in that direction," said Scott Mather, portfolio manager at PIMCO, the world's largest bond fund with $1.2 trillion in assets under management. "We might have an even harder time than Japan did."
Not all economists believe the United States will repeat the Japanese experience, but markets have been flashing warning signs.
Three years after the United States' housing bubble burst, 10-year Treasury yields are struggling to stay above 2 percent, while stocks have declined every month since April.
Japan's 10-year yield has not closed above 2 percent since 1999 and the Nikkei is 77 percent below a peak hit in 1990 before a commercial real estate bubble burst.
U.S. economic output through the second quarter of 2011 has yet to surpass the level seen before the crisis hit in 2008 and may not do so soon; economists polled by Reuters give the the country nearly one-in-three odds of falling back into recession over the next year.
"The financial turmoil of the last three or four months has been the markets coming to terms with a period of prolonged slow growth," said Andrew Scott, professor of economics at London Business School. "With households paying down debt and not consuming, it's hard to see where growth will come from."