The days of strong recoveries are gone. That’s because the economy has been slowed by demographics, low productivity rates and the millions of adults without high school diplomas dropping out of the workforce.
Those were some of the comments at an economic outlook meeting for 2017 sponsored by the University of Chicago’s Booth School of Business.
The economic panel said the economy is in decent shape. However, it added, don’t expect a return to the good old days of recoveries with GNP growth rates of 4 percent or better.
“The economy is in reasonable shape, but growth is anemic,” said Randall S. Kroszner, a professor of economics at Chicago Booth and a former Federal Reserve governor.
“There are fewer labor hours and lower productivity growth. This is a worldwide phenomenon,” he added.
Amir Sufi, another professor at Chicago Booth and the author of the book House of Debt, said that this year “I don’t think GDP growth will be above 3 percent.”
What will it be?
He said that GDP growth “will likely be between 1.9 percent and 2.4 percent.” He said that at one time the economy could easily generate more than 3 percent or 4 percent or more in annual growth. “But now I’m pretty sure that is not going to happen.”
What’s wrong?
For one thing, fewer workers are entering the workforce as birth rates drop. This is a problem that is affecting advanced industrial countries around the world, the panel said. The economists also pointed to an unexplained problem of slowing productivity rates. Another economic problem is that millions of older Americans never graduated from high school, and many of them have given up on finding work. This group was a strong factor in the election of Donald Trump, who several panelists said they are still trying to figure out.
What’s to be done?