Instead of contributing to more effective demand management, reduced government outlays have placed an even greater burden on experimental monetary stimulus measures policies that are already overstretched. And rather than crowd in private investment, insufficient infrastructure spending is threatening the U.S.'s growth potential.

A properly designed pro-growth infrastructure program would have the benefits of offsetting the drag in current and future GDP growth. It can be financed efficiently at today’s unusually low interest rates. And it would contribute both to social well-being and private-sector productivity.

Such a program would play a role in reconciling inconsistencies that were highlighted by the GDP report and should be priority concerns for our politicians. And for these issues to be properly resolved, the infrastructure program would need to be part of a bigger effort that combines a comprehensive approach to demand management with a broad array of pro-growth structural reforms, lifting pockets of excessive indebtedness and improving regional and global policy coordination.

Mohamed El-Erian is chief economic advisor at Allianz SE.

 

 

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