Famed Economist: US GDP Growth Will Never Recover
World famous investor Jeremy Grantham has released his forecast for the American economic future – and if he’s right, we’d all better pack up and head for New Zealand. According to Grantham, an annual GDP growth rate of 3% -- long considered the norm in the United States – “is gone forever.” Instead, says Grantham, “GDP growth … is likely to be about only 1.4% a year, and adjusted growth about 0.9%.”
It gets worse. Population growth is done; it will creep up at just one half of one percent. Adding women to the workforce helped increase work hours and productivity, but less children will cancel that out in the long run. That means less work hours, which also means less productivity. By 2040, says Grantham, the US’ manufacturing base will be only 5% of the total economy. Service productivity will barely grow by 2030. We will be spending more money on resources, including oil. “The price rise might even accelerate as cheap resources diminish,” Grantham writes. “If resources increase their costs at 9% a year, the US will reach a point where all of the growth generated by the economy is used up in simply obtaining enough resources to run the system.” Within 11 years, the United States would actually be shrinking.
Grantham concludes: “Critically, the tech boom and bust and the following housing boom and housing and financial busts helped camouflage the recent unpleasant economic development lying below the surface: the steady and important drop in long-term US growth.”