JACKSON HOLE, Wyo. (Reuters) - It could be 10 years
before economic growth in the United States and elsewhere
returns to pre-recession norms and employment rates may never
regain lost ground if past history is any guide, two prominent
economists said in a paper presented on Friday.

Carmen Reinhart and Vincent Reinhart, in a paper presented
at an annual conference hosted by the Federal Reserve, found
that growth in gross domestic product is significantly lower
during the decade after a severe financial crisis that is felt
world-wide, as was the case with the recent meltdown.

Their assessment could damp the spirits of central bankers
gathered at the annual Fed enclave in Jackson Hole, Wyoming,
who are already anxious that the recovery from the painful
recession has run out of gas and they may be forced to take
further steps to stimulate growth.

The authors, a husband and wife team -- she is an economics
professor at the University of Maryland and he is a former
director of the Fed's division of monetary affairs who is now a
resident scholar at the American Enterprise Institute -- drew
their conclusions from studying global and country-specific
crashes, including the 2007 subprime mortgage collapse, the
1973 oil shock, and the 1929 Great Depression.

Policy makers should consider that growth, employment and
credit may never regain levels attained before 2007, they
said.

"Recent discussions about the 'new normal' in reference to
the post-crisis landscape leave the impression that the
pre-crisis environment was 'normal,"' they wrote. "In fact,
there are reasons to believe that the pre-crisis decade set a
high water-mark distorted by a variety of forces."

Unemployment rates are much higher in the decade following
a crisis, the authors said. In 10 out of 15 of the episodes of
turmoil they reviewed, employment levels never returned to
pre-crisis levels.

Other indicators of economic activity showed a similar
pattern: housing prices tended not to recoup lost value over a
decade and domestic borrowing declined over about seven years,
the authors said.

"If deleveraging of private debt follows the tracks of
previous crises as well, credit restraint wil damp employment
and growth for some time to come," they wrote.
(Editing by Leslie Adler)