Wednesday, March 31, 2010

US Growth: Not In Line With ObamaBudget Predictions

Remember that the Obama budget--which imposes massive deficits on the country--is based on economic growth north of 4%/annum for the next few years.

It is an alarming, jaw-dropping conclusion. The U.S. standard of living, says superstar Northwestern University economist Robert Gordon in a new paper, is about to experience its slowest growth “over any two-decade interval recorded since the inauguration of George Washington.” That’s right, get ready for twenty years of major-league economic suckage. It is an event that would change America’s material expectations, self-identity and political landscape. Change in the worst way.

Now it’s not so much that the Great Recession will morph into the Long Recession. More like ease into the Great Stagnation. As Gordon calculates it, the economy will average only 2.4 percent annual real GDP growth over that span vs. 3 percent or so during the previous 20 years. On a per capita basis, the economy will grow at just a 1.5 percent average annual rate vs. 2.17 percent between 1929 and 2007.

Not only will many people be eating grass-flavored soup for the next 20 years or so; the deficit will grow MUCH faster than ObamaBudget projections b/c tax revenues will simply suck.

HT: Ace

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