A Decade of Slow Growth, Followed by Two Decades of Slow Growth
Tuesday, October 05, 2010 at 10:58 am
Northwestern economist Robert Gordon brings the gloom:
[Gordon] belongs to the committee of distinguished economists who officially declared on Sept. 20 that the U.S. recession ended way back in June 2009. Don’t mistake that pronouncement for optimism. According to Gordon’s research into the long-term determinants of growth, America’s next two decades are going to be disappointing. He predicts that between 2007 and 2027, gross domestic product per capita will grow at the slowest pace of any 20-year period in U.S. history going back to George Washington’s Presidency. Although the data he examined closely go back only to 1891, he says that based on his knowledge of early American economic history, he thinks it is fairly safe to predict that the period will witness the slowest growth ever in GDP per capita and, therefore, American living standards.
Why? The Baby Boomers will retire, meaning millions of them will stop contributing to the economy and will start living off of state programs like Social Security, disability insurance and Medicare. No technological revolution, like the internet, is on the horizon to juice growth either.
What’s worse is that the spell of gloom Gordon predicts would come after, well, a spell of gloom. For the decade before the recession, the United States’ GDP has grown at a reasonably healthy clip. But most workers have experienced no income gains at all. Instead, the income gap has widened, with wealth accruing disproportionately to the very, very well-off.
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