One Economic Sickness, Five Diagnoses
Over the last decade, the growth rate of real G.D.P. per person has averaged just 0.44 percent per year, compared with the historical norm of 2.0 percent. At a rate of 2.0 percent, incomes double every 35 years. At a rate of 0.44 percent, it takes about 160 years to double.
.. A statistical mirage
.. Think of how your smartphone now replaces your camera, GPS, music system and various other previously stand-alone devices. According to this theory, the problem is not in the economy but in the statistics.
.. A hangover from the crisis
.. Secular stagnation
.. reduced demand for capital to fund investment projects. He cites several reasons for the change, including lower population growth, lower prices for capital goods and the nature of recent innovations, like the replacement of brick-and-mortar stores with retail websites.
.. inability of the economy to generate sufficient demand to maintain full employment.
.. Slower innovation
.. This generation’s innovations, like the smartphone and social media, are just not as life-changing.