'A decade of slow growth, followed by two decades of slow growth'

From Bloomberg Businessweek (via Annie Lowrey at The Washington Independent; my emphasis):

Robert J. Gordon of Northwestern University belongs to the committee of distinguished economists who officially declared on Sept. 20 that the U.S. recession ended way back in June 2009. Don't mistake that pronouncement for optimism. According to Gordon's research into the long-term determinants of growth, America's next two decades are going to be disappointing. He predicts that between 2007 and 2027, gross domestic product per capita will grow at the slowest pace of any 20-year period in U.S. history going back to George Washington's Presidency. Although the data he examined closely go back only to 1891, he says that based on his knowledge of early American economic history, he thinks it is fairly safe to predict that the period will witness the slowest growth ever in GDP per capita and, therefore, American living standards.

Gordon isn't out on a limb. His prediction is based on several strands of existing research on workforce demographics, educational attainment, and technological change. His contribution has been to pull the strands together and draw the logical conclusion. According to data Gordon prepared for Bloomberg Businessweek, based on research he published earlier this year, GDP per capita in the U.S. grew at a robust 2.44 percent annual rate from 1928 to 1972. That slowed to 1.93 percent from 1972 to 2007 and is likely to slow further, to 1.5 percent from 2007 to 2027. At that rate, GDP per capita would increase by a total of 35 percent by 2027. That's far short of the 62 percent that it would grow if the 1928-1972 pace of growth had continued, or the 47 percent increase if the 1972-2007 pace had continued.

Ms. Lowrey notes that, when looking at that 1.93% GDP growth rate from 1972–2007, you have to remember that most of that growth went to the top, especially in the latter years:

But most workers have experienced no income gains at all. Instead, the income gap has widened, with wealth accruing disproportionately to the very, very well-off.

So the two slow decades Gordon predicts follow the already slow Bush decade just ended. In fact, if you factor in the increased grip that billionaires have on the current economy, I'd expect even less of that shrunken 1.5% pie to go to the "small people". Why waste it?

The Bloomberg Businessweek article concludes:

If living standards do rise more slowly over the next couple of decades, it will become even harder for the U.S. to fix costly problems, from carbon emissions to poverty.

Assuming the Barons of the New America even allow us to try. Batten down, folks.

GP