Tuesday, April 2, 2013

Growth Stops For No One

Forget the Great Recession of the 2000s. Forget the Internet Boom of the 1990s. Forget Reaganomics of the 1980s. Forget OPEC and Stagflations of the 1970s. Forget Vietnam of the 1960s. Okay... World War 2 and the Great Depression did matter, but forget everything that happened before that too. 

If you go back to the beginning of the Industrial Revolution in the United States (around the time of the signing of the Constitution) and projected US Real GDP Growth per Capita going forward (using a logarthimic scale) for the next 220 years, then you would end up with a pretty close estimate of exactly where we are today. 

History says that the US economy is a juggernaut that can be temporarily slowed, but that cannot be stopped. It will bounce back. It will return to the trend line. The questions is: does our future hold the same as the past? Or is this time different? Have the structural fundamentals of our economy changed so much with unprecedented inequality, globalization, and technology that the old rules no longer apply?

We will have to wait and see.

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