In Search Of Higher Growth Rates
March 26, 1998
While stocks are soaring and inflation is all but nonexistent, the U.S. economy still hasn't achieved the golden growth rates of the 1950s and 1960s, some economists point out.
- From 1950 to 1973, U.S. gross domestic product growth averaged 3.9 percent a year.
- Average growth during the Reagan years was 3.2 percent -- which has slowed to 3.0 percent during the Clinton presidency.
- In the latest Economic Report to the President, Clinton's advisers predict a further slowing to a long-term trend of 2.4 percent (see figure).
That decades-long slowdown has had the effect of making us all less wealthy than we might be, analysts say.
- Had the U.S. economy continued to grow at the average of 3.9 percent annually, total GDP would be about 37.5 percent higher than it is now.
- That higher rate would have generated a GDP of around $11 trillion instead of $8 trillion in current dollars -- or more than $10,000 more in GDP per capita.
Had those growth trends continued, economists say, problems such as taming the federal budget and what to do about Social Security would never have manifested themselves.
Source: Editorial, "Making America Rich," Wall Street Journal, March 26, 1998.
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