Why the Economy Isn’t Growing Like It Used To
Secular stagnation is here to stay for the developed world, as we reach the limits to what one person can consume
The big economic trend to watch is secular stagnation. In a nutshell, the economies of the developed countries aren’t growing like they used to. Just one look at the 10-year moving average for GDP growth for the U.S. and other rich nations over 70 years, and it’s clear that something major is dampening growth. The cause is simple but counterintuitive: We are reaching the limit to how much a single human can consume. Without growth in consumption, there can be no economic growth.
One problem at the outset is the definition for secular stagnation. According to Wikipedia, stagnation is defined as follows:
a prolonged period of slow economic growth (traditionally measured in terms of the GDP growth), usually accompanied by high unemployment.
Economists added the word “secular” to indicate stagnation that can’t be explained by temporary causes, such as business cycles, but that aspect is already embedded in the word “prolonged”. A clearer phrase would be “long-term stagnation”, to indicate stagnation on the order of 20–40 years, longer than the Long Depression or the Great Depression. In other words, this is…
