Lost decade or lost generation? Neither has to be America’s reality

Is America headed toward a “lost decade”? That’s how some in the news media have interpreted a feeble new forecast from the Congressional Budget Office. That projection suggests it will take a long time for the US economy to fully recover from the coronavirus pandemic. Weaker consumer spending and business investment will take 3 percent off the gross domestic product 10 years from now. That works out to a cumulative $16 trillion, or $7.9 trillion adjusted for inflation.

But even before COVID-19, the economy was headed toward something more like a “lost generation.” Real GDP growth has averaged just 2.3 percent annually since the Global Financial Crisis, a full percentage point lower than growth over the previous 25 years. And looking forward, the CBO was expecting output to grow at an average annual rate of 1.7 percent from 2021 to 2030. Forecasts from the Federal Reserve and many Wall Street banks are similarly anemic. They all see the roughly the same miserable math of slight labor force growth and modest productivity growth.

But as a nation we should strive for better. (One possible goal: America should attempt to grow as fast in the future as it did in the past.) I sort of like President Trump’s notion that America remains a “developing economy.” No, not like Mexico or Vietnam, of course. We’re an extraordinarily wealthy nation pushing forward the technological frontier. But the American economy is a dynamic entity that experiences creative destruction. Businesses and sectors emerge, rise, and fall. It’s always developing into something different than it was the day before.

Συνέχεια ανάγνωσης εδώ

Πηγή: aei.org

Σχετικά Άρθρα