I have been blogging mainly about foreign policy during the last year. Of course, there has been so much going on around the world — in Ukraine, the Middle East, and Hong Kong among other places, it has been hard to avoid.
Still, long-time readers may recall that three years ago I wrote an essay about the slow growth I expected in the US economy for a very long time. We have had bursts of hope and quarters of growth, to be sure, but no consistent growth that would propel a true shift to strong economic vitality. Such gains in employment as we have enjoyed have not kept pace with overall population growth; rather the rate of unemployment has fallen because people have withdrawn from the labor force and stayed out. As a recent review of the evidence noted, “were the same percentage of adults working or seeking work today as when President Obama took office, the unemployment rate would be 9.7%.”
In other words, there is no cause for celebration, and my prognosis of three years ago still looks on target. The reasons why were laid out in that 2012 essay, and seem to have been borne out by events.
China’s economy has slowed down and continues to decelerate; Europe shows no signs of breaking out of its funk; and in the US productivity gains are not producing higher wages so demand growth remains sluggish.
We are now looking at the better part of a decade of slow growth (2007-2014); I would not count on the next decade being much better, as these three big trends don’t seem headed for change. Until they do, it’s hard to see how the economy could do much better.
When we see strong wage gains for U.S. workers for three consecutive quarters we might have a real recovery. Until then, I think not.