It is quite conceivable that over the next several years, there may come a time when many will long for the good old days when the economy was growing two percent. Two percent doesn’t sound so impressive now. As indicated by writer Eduardo Porter, back when Lyndon Johnson was president, the U.S. economy managed to expand by nearly five percent a year for nearly a decade.
During Ronald Reagan’s presidency, growth averaged a bit more than four percent a year. Based on that, today’s roughly two percent U.S. economic growth doesn’t sound especially good, but we are facing a new normal. Economic growth is the sum of labor force growth and productivity growth.
According to the Economic Cycle Research Institute, the next five years may be associated with half a percentage point of labor force growth plus productivity growth of half a percentage point. That means that growth in America could be as low a one percent for a sustained period of time.
Part of this is due to the fact that the economy is being squeezed by successive waves of retiring baby boomers and no longer gaining from a surge of women entering the workforce.
