Getting to Growth

Are there problems in the US economy?

Source: St. Louis Fed

Sure there are. Exhibit one is the rate of economic growth. Any way you measure it, real economic growth has slowed significantly over the past 30 years. The economy is a lot less volatile than it was in the ‘60s, and ‘70s, but the rate of economic expansion has gradually gotten slow and slower. The economy used to grow faster; now it’s growing more slowly. Whether we’re exporting jobs in order to buy more stuff or socializing more with our smart phones and innovating less – whatever the reason – the average growth has rate declined from 4.5% in the ‘60s to 2% in the current decade.

And this is happening despite the fact that we are now in the third longest economic expansion since we’ve been keeping detailed economic records. Central bankers are congratulating themselves about their signal achievements – low unemployment, low inflation, and a prolonged expansion – amid hanging glaciers and gorgeous mountain scenery.

Photo: Jon Sullivan. Public Domain. Source: PD Photo

But slower growth has had a significant cost. Ben Bernanke blames slow growth for the rise of economic populism in the US, UK, and Europe. Since 2000, the growth of drug, alcohol, and suicide deaths among non-minority Americans has soared across the country. In contrast to the rest of the world, the total mortality rate for white 45-54 year olds in the US has risen over the last 30 year – outstripping advances in health care. Some are calling this, “death by despair.”

Souce: The Atlantic

The lack of economic growth leads to a lack of jobs. While unemployment may be low now, participation in the job market is low, too. And even if you have a job, real wages have been stagnant for the past decade as productivity growth has slowed.

Our social safety net may provide financial support, but it doesn’t provide meaning, or hope. A healthy economy won’t solve all our social problems, but it doesn’t hurt. Somewhere in the position papers presented at Jackson Hole this week, there ought to be a way back to growth.

Douglas R. Tengdin, CFA

By | 2017-08-25T07:32:38+00:00 August 25th, 2017|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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