RedmondLonghorn
Footballguy
I just went through a great presentation by the co-founder of ECRI, which is one of the best economic forecasting and consultancies out there. Their work is always thoughtful and thought-provoking, even if the forecasts aren't exactly correct.
Some of it is a little esoteric, but I'll summarize the key parts:
1) The "good old days" when the US was the absolutely dominant economic force globally were an anomaly, historically speaking.
2) China and India were the dominant economies for most of recorded history. They fell far behind over the past two centuries, as Western Europe and then the US reaped the benefits of colonialism and the industrial revolution, but they have been rapidly making up ground over the past few decades.
3) For the US to reverse this trend, it would have to grow its real GDP at a rate of nearly 4% for a sustained period of time.
4) This is virtually impossible, because:
a) Potential GDP growth is a function of labor force growth and labor productivity growth. Basically it is the sum of the two. Demographics being what they are, labor force growth in the US is low: the outlook for labor force growth over the next several years is about 0.5% annually. Legal immigration accounts for over half of that. Reducing legal immigration and expelling significant numbers of illegal immigrants working in the US now would reduce labor force growth to near zero.
b) Labor productivity growth has been very slow recently. It averaged about 2.5% per year from 1950 to 2008, but is more recently averaging 0.5% per year. The reasons for this are complex and not fully understood, but the bottom line is that absent another technological step change the near future is far more likely to look like the recent past than like the second half of the 20th century.
ECRI's "'America First' in Perspective"
The bottom line is that Trump's immigration policies are likely to hinder, not help, growth. And absent somehow re-igniting the labor productivity growth engine, the potential for GDP to grow at a rate substantially above a real rate of 1-2% per year over a sustained period is virtually nil.
Some of it is a little esoteric, but I'll summarize the key parts:
1) The "good old days" when the US was the absolutely dominant economic force globally were an anomaly, historically speaking.
2) China and India were the dominant economies for most of recorded history. They fell far behind over the past two centuries, as Western Europe and then the US reaped the benefits of colonialism and the industrial revolution, but they have been rapidly making up ground over the past few decades.
3) For the US to reverse this trend, it would have to grow its real GDP at a rate of nearly 4% for a sustained period of time.
4) This is virtually impossible, because:
a) Potential GDP growth is a function of labor force growth and labor productivity growth. Basically it is the sum of the two. Demographics being what they are, labor force growth in the US is low: the outlook for labor force growth over the next several years is about 0.5% annually. Legal immigration accounts for over half of that. Reducing legal immigration and expelling significant numbers of illegal immigrants working in the US now would reduce labor force growth to near zero.
b) Labor productivity growth has been very slow recently. It averaged about 2.5% per year from 1950 to 2008, but is more recently averaging 0.5% per year. The reasons for this are complex and not fully understood, but the bottom line is that absent another technological step change the near future is far more likely to look like the recent past than like the second half of the 20th century.
ECRI's "'America First' in Perspective"
The bottom line is that Trump's immigration policies are likely to hinder, not help, growth. And absent somehow re-igniting the labor productivity growth engine, the potential for GDP to grow at a rate substantially above a real rate of 1-2% per year over a sustained period is virtually nil.
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