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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: JohnM who wrote (313495)	10/8/2016 9:26:54 AM
From: Sam	Respond to of 540746

What?! They are saying that Reagan, Bush, Clinton, Bush and Obama had nothing to do with it?! But I thought the Prez was responsible for everything! [/yeah, sorry, more sarcasm] There’s a devastatingly simple explanation for America’s economic mess By Ana Swanson October 7 at 12:18 PM washingtonpost.com Ever since the financial crisis, the U.S. economy has grown at a stubbornly slow rate, far less than the 3 percent that was widely considered a sign of good health. This disappointing outcome — the Federal Reserve expects the economy to grow only about 1.8 percent this year — has been blamed by economists on many factors: the financial crisis in 2008, fiscal fights in Washington, Europe's repeated debt crises, China's slowdown and more. But according to provocative new research from Fed economists, there might be a simple explanation for the slow growth — and there might not have been much policymakers could have done about it. If the new explanation is true, it might also explain why efforts to boost economic growth — including trillions of dollars in monetary stimulus and near-zero interest rates — haven't worked that well. In a new paper, the Fed economists argue that America's slow economic growth and low interest rates might have been largely inevitable — and they might not have much to do with the 2008 financial crisis at all. Their main culprit: demographics. The researchers — Etienne Gagnon, Benjamin Johannsen and David Lopez-Salido — created a model of the economy that shows how changes in births, deaths, aging, migration, labor markets and other trends have affected the U.S. economy since 1900. Using that model, they find that most of the decline in economic growth and interest rates since 1980 has been due intractable factors like the aging and retirement of baby boomers, lower fertility rates and longer life expectancy for Americans. They find that these demographic changes account for a 1.25 percentage point decline in annualized economic growth since 1980, which is essentially all of the decline we’ve seen in that metric, according to some estimates. What’s really remarkable is that we might have seen this coming. The macroeconomics effects of this kind of demographic transition “have been largely predictable,” the economists write in their paper. In fact, most of the relevant changes that have weighed on growth and interest rates took place before the 1980s. continues at washingtonpost.com Personally, I think that they are right. It also explains why Japan has been in an economic funk for over 2 decades and why the EU is there as well.