Problems with US economic growth

Here is a 13 page report of Robert Gordon’s work from 2012 which is similar to his 2014 work about lower GDP growth in the USA.

The US economy still faces six daunting headwinds that will limit future potential growth and hold it below the pace which innovation would otherwise make possible.

The slowdown in growth already takes into account the first two headwinds.

1. The “demographic dividend” is now in reverse motion. The original dividend was another one-time-only event, the movement of females into the labor force between 1965 and 1990, which raised hours per capita and allowed real per-capita real GDP to grow faster than output per hour. But now the baby boomers are retiring, no longer included in the tally of total hours of work but still included in the population. Thus hours per capita are now declining, and any tendency for life expectancy to grow relative to the average retirement age will further augment this headwind. By definition, whenever hours per capita decline, then output per capita must grow more slowly than productivity.

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