The global economy is being hobbled by a new generation of zombies, the economic walking dead. The US consumer is in the early stages of an unprecedented retrenchment. In the 13 quarters since the beginning of 2008, inflation-adjusted annualised growth in consumption has averaged 0.5 per cent. Never before in the post-second world war era have US consumers been this weak for this long.

The zombie syndrome has an important antecedent. It was a symptom of the Japan disease, which led to the first of two lost decades for that country. Encouraged by the government, Japanese banks kept extending credit lines for a broad cross-section of insolvent companies, postponing restructuring and inevitable failure.

Japanese productivity growth weakened greatly as a result of the ensuing zombie congestion. The lifeline of policy-driven bank lending allowed bankrupt groups to hang?on to excess workers and redundant capacity. But that?sapped?post-bubble?Japan?of?needed?vitality.