A Decade of Slow Growth, Followed by Two Decades of Slow Growth

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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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31 Comments

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[...] and this isn’t even the most pessimistic thing I’ve heard — well, read — [...]


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Pingback posted October 5, 2010 @ 6:33 pm

[...] Robert Gordon’s case for economic doom is pretty persuasive, but somehow leaves me feeling more [...]


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Pingback posted October 5, 2010 @ 6:39 pm

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Endgame
Pingback posted October 5, 2010 @ 7:03 pm

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boloboffin
Comment posted October 5, 2010 @ 6:30 pm

I hate to mention this, but with income levels stagnating, that means that Social Security benefits are going to be lower than they would be. Maybe that's why Washington economists are cool with the income gap growing – it's an invisible way of trimming Social Security long-term.


Healing From Within.
Pingback posted October 5, 2010 @ 8:02 pm

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Pingback posted October 5, 2010 @ 8:14 pm

[...] and this isn’t even the most pessimistic thing I’ve heard — well, read — [...]


Rockfish 66
Comment posted October 5, 2010 @ 7:17 pm

“No technological revolution, like the internet, is on the horizon to juice growth either.”
Actually, energy tech is right there. But the internet didn't need Congress.


jbk
Comment posted October 5, 2010 @ 8:08 pm

“No technological revolution, like the internet, is on the horizon to juice growth either.”

Such foresight. Just like in 1987 when everyone was saying “thank God the internet will be here soon to spur economic development and save us” because they knew that it was just around the corner.


JimLosAltos
Comment posted October 5, 2010 @ 8:43 pm

Well …. the government funded development of the Internet (called DARPANET) and then it was Al Gore's legislation that created the .COM extension, i.e. enabled commercial use.

But never let the facts spoil a good ideology!


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Pingback posted October 5, 2010 @ 10:13 pm

[...] A Decade of Slow Growth, Followed by Two Decades of Slow Growth … [...]


Stretch.
Comment posted October 5, 2010 @ 9:18 pm

Ok, the Internet didn't need Congress to think it was spending money on stimulating the economy. They thought they were gonna kill a lot more commies with this darpanet egghead thingy.


JimLosAltos
Comment posted October 5, 2010 @ 9:23 pm

Touche'. I never said that the gov't did it for the right reasons, just that the gov't was the “Venture Capitalist” for the Internet,

… and while we're at it, taxpayers funded basic development for the Integrated Circuit, and for the microprocessor, and for the compiler, and for interpreted programming languages, and for spread spectrum communications (cell phones) …. you get the idea.


JimLosAltos
Comment posted October 5, 2010 @ 9:25 pm

Very good point.

Conversely, if wages had grown with productivity in the last 20 years instead of all the benefits going to increasing big biz profits, then there would be zero funding problems with Social Security, it would be running a huge surplus!

(Even larger than the SS trust fund surplus).


RON MANLY
Comment posted October 5, 2010 @ 10:49 pm

How about giving us a link to Gorden's article or research paper?


Frank McGillicuddy
Comment posted October 6, 2010 @ 1:19 am

the internet started in the early 1970's and until home computing became advanced enough (what, OS/2 and/or MSFT Windows in the early 1990's) there was no ability to really network computers…. and it's not like in 1985 there were lots of internet/browser/blogging predictions extant, certainly not among economists – so the fact of not “seeing” the next wave of tech advance is hardly unique to the present – carry on


Ncdirector
Comment posted October 6, 2010 @ 2:15 am

At least she's bringing the truth!


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SSrocks
Comment posted October 6, 2010 @ 6:14 am

Wrong. The return on your SS contributions is considerably higher for the lowest wage earners relative to those at the top. In other words , funding low income retirements is more costly to the SS system than funding high income retirements. The solvency of SS would be maximized if all workers were making $ 107k/yr , the income limit for contributions , or higher.


George
Comment posted October 6, 2010 @ 11:10 am

I love it. Everyone's getting down on their knees and praying to the Technology God again, because he's sure to save us! The great American Tech God will provide us with a game-changing technology which will quickly bump up everyone's income.
Forgetting the law of diminishing returns, of course.
Or the fact that India and China were in no position to compete 20 years ago, but they sure are now… they would just stand and watch as we grabbed all the $, right?


Sgt Friday
Comment posted October 6, 2010 @ 3:46 pm

Not only GDP, but GDP per capita and productivity.
The middle class is getting screwed by the upper class/


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Johnkahler
Comment posted October 9, 2010 @ 2:50 am

You're right, I have the first edition of Bill Gates' book “The Road Ahead” – and the Internet received hardly a mention. The second edition was very different. Even Mr. Gates missed the revolution that was just over the horizon. He was just smart enough – or positioned well enough – to take advantage when it came.


A Decade of Slow Growth, Followed by Two Decades of Slow Growth
Pingback posted October 9, 2010 @ 12:03 pm

[...] the income gap has widened, with wealth accruing disproportionately to the very, very well-off. http://washingtonindependent.com/996…of-slow-growth Reply With Quote + Reply to Thread « Previous Thread | Next [...]


Exceptional
Pingback posted October 11, 2010 @ 9:05 am

[...] rise in anti-immigration and anti-trade sentiments reduce the prospects for growth. There’s even talks that the US is about to face decades of economic stagnation. Not an optimistic outlook for someone [...]


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Guest
Comment posted October 16, 2010 @ 2:00 am

I remember in 1998 we were seeing articles and research papers about the end of the business cycle and the “new economy” that would fund infinite future prosperity. I wasn't around in the late 70's early 80's (or rather wasn't old enough to read), but I suspect they weren't rather pessimistic and didn't anticipate the 80's and 90's very well.


2070438
Comment posted September 7, 2011 @ 12:47 pm

2070438 beers on the wall. sck was here


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