U.S. Hears Echo of Japan's Woes

In 1999, Mr. Bernanke, then an academic, tartly criticized Japanese officials for mishandling their 1990s financial crisis, saying Japan’s plight was “self induced.” Partly because of that expertise, American policy makers have long been confident, even during the darkest days of the current financial crisis, that the United States could avoid the fate of Japan and its two lost decades.

But now, with growing signs that the United States might be a lot closer to a Japan-style slump than previously thought, that confidence is waning.

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“The danger is if the U.S. plunges into policy paralysis just like Japan in the 1990s,” said Shumpei Takemori, an economist at Keio University in Tokyo. “Ideological divides and political divides can make bold policy action impossible.”

In fact, some economists warn that the United States may be deeper into Japan-style stagnation than is widely realized. Simon Johnson, a former chief economist at the International Monetary Fund, estimates that the total output of the American economy this year will be no higher by his estimate than it was in 2006.

“We’ve already lost half a decade,” said Mr. Johnson, now a professor at the Massachusetts Institute of Technology.