The financial industry, as well as everyone else on the planet, will have to learn to live in a "slower growth world," Jeremy Grantham said.
Expect world financial markets and economies to grow at a much more modest rate moving forward as the world's resources get used up, Grantham told an auditorium full of attendees at the Morningstar Investors Conference in Chicago this morning.
"Something has changed," Grantham said. "We're in the beginning of a really big crisis; we're hitting a glass ceiling. It's a finite planet and we have finite resources."
In what seemed like a presentation more tailored for a World Geo Summit, Grantham, keynote speaker and chief investment strategist for Boston-based asset management firm Grantham, Mayo, Van Otterloo & Co., told the audience that the performance of financial markets will eventually be affected by other conditions besides interest rates and currency rates.
Citing a world population explosion headed to 9 billion people led by China, and projected dwindling supplies of natural resources, Grantham said financial advisors along with the rest of the earth's population may have to get used to the idea of an annual GNP rate of 2.2 percent in the U.S. and 1.7-to-1.8 percent in other relatively rich countries.
Grantham said the slowdown will be fueled by a shrinking supply of energy, metals and food. "China's consumption of the world's commodities is doubling every few years," he said. "And the most immediate problem will be the distribution of food."