The "new normal" is a buzzword that's been doing the rounds for quite a while, but might be a fiction, according to Deutsche Bank US chief economist Joseph LaVorgna.
Today LaVorgna has released a note titled "Is the old normal the new "new normal"?"
That implies that the idea of a shift to very different business conditions in the wake of the 2008 crisis is a falsehood, and that we're returning to a business as usual state.
LaVorgna points to stronger that expected economic data, with strong US durable goods orders in November, higher consumer spending and today's data showing a falling trade deficit.
Deutsche Bank has revised up its US growth predictions for the last quarter of 2013 from 3.8 per cent to four per cent (but bear in mind that those figures are annualised). If accurate, that would be the biggest jump in final quarter growth over the previous final quarter since 2005.
LaVorgna suggests that Deutsche Bank's current estimate for US growth in 2014 - 3.4 per cent - is now looking cautious. He says that "the economy will experience much less fiscal drag this year relative to last year when higher taxes and less spending were worth as much as two full percentage points on real GDP growth."
If all this is correct, then interest rates may begin to normalise from their historic lows. LaVorgna says that "rates are likely to rise significantly further as the market brings forward the timing of Fed rate hikes from the back half of 2015 to the front half of 2015".
We could now see rate hikes as early as the first quarter of next year.