Tuesday, November 20, 2012

Economist: US GDP Growth ‘Is Gone Forever’


British investor and economist Jeremy Grantham is regarded as a highly knowledgeable investor in various stock, bond, and commodity markets, and is particularly noted for his prediction of various bubbles. He has recently released his forecast for America’s economic future. According to Grantham’s report, the once normal annual GDP rate of growth of 3% “is gone forever.”
Grantham writes,
The U.S. GDP growth rate that we have become accustomed to for over a hundred years – in excess of 3% a year – is not just hiding behind temporary setbacks. It is gone forever. Yet most business people (and the Fed) assume that economic growth will recover to its old rates.
He goes on to state that “GDP growth (conventionally measured) for the U.S. is likely to be about only 1.4% a year and adjusted growth about 0.9%.”

In addition to that Grantham also points out that population growth is down and will only grow at a crawling rate of one half of one percent and with more women moving into the work force and that cultures disregard for children it could slow further.

In addition Grantham points out that resource costs have been rising and will continue to escalate higher. He writes:

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