Busting out of the 1.9% economy

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The Congressional Budget Office yesterday published its annual 10-year economic outlook. It says, essentially, the economy will continue expanding for the coming decade at the tepid pace of the last decade. It predicts a slow-growth “new normal” of 1.9% annual expansion extending through 2027. If nothing changed, CBO might very well be correct. Yet it’s possible, even likely, that economic policy will change more in the next few years than any time since the early 1980s, maybe even since the 1930s.

CBO projects growth of 2.3% this year, then 2.0% in 2018, 1.7% in 2019, 1.5% in 2020, 1.8% in 2021, and 1.9% from 2022-2027. It’s a tragic outcome if it comes to pass. We see below what a 1.9% economy got us over the last decade: a gigantic growth gap of around $2.8 trillion in lost output, compared to what we might have expected. continue reading . . .

What’s behind the startling decline in publicly traded U.S. firms?

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An underreported story of the last two decades is the sharp decline in the number of publicly traded U.S. firms. In 1996, U.S. stock markets boasted 7,322 listed firms. By 2015, however, that number had dropped by more than half, to 3,200. If we adjust for population, the U.S. had 2.2 public firms per hundred thousand people in 1975, but today that number has fallen to 1.1 public firms per hundred thousand people. The peak in 1996 was 2.7 public firms per hundred thousand. continue reading . . .

Are the pessimists right about America’s slow-growth future?

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In his big new book on the history and future of innovation, Northwestern University economist Robert Gordon argues that information technology is a spent force. Computers and networks just aren’t as powerful as previous inventions, he argues, and the U.S. should expect another 25 years of relative stagnation. He thinks productivity growth up to 2040 will be just half our historical average, meaning tens of millions of middle-class workers will struggle to get ahead.

I’m much more optimistic. continue reading . . .