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Since the late 70s consumption growth has outpaced productivity growth. The gap was plugged with debt. You cannot roll that debt over forever, even if you are J
by jackcosgrove 6y ago
Since the late 70s consumption growth has outpaced productivity growth. The gap was plugged with debt. You cannot roll that debt over forever, even if you are Jerome Powell.
The older people who hector young graduates about paying back their student loans are precisely the people who voted for deficits with no intention of ever paying off the debt.
- cannabis_sam 6y ago> Since the late 70s consumption growth has outpaced productivity growth. Really? It seems more like companies been capturing more of the productivity gains since the 70s, and paying it to shareholders...
- jackcosgrove 6y agoTotal US debt to GDP was stable at around 150% until 1980 when it began to rise, topping out at 400% in 2009 and settling around 360% since then. This debt increase partially masked both slowing GDP growth due to demographics at the national level, and slowing productivity growth at the individual level. Regardless of the internal cause of slowing productivity growth, it did slow and maintaining the same debt to GDP ratio as before 1980 would have required accepting a standard of living that rose more slowly than it did. (GDP growth slowdown due to demographics washes out on a per capita basis.) It seems the most likely cause for the 1970s productivity slowdown was the oil shocks and the most likely cause for the 2000s productivity slowdown is the falling marginal return on research expenditures.