ECRI's Lakshman Achuthan joined Bloomberg TV to discuss low trend growth, productivity, wages, the U.S. economic outlook, and more.
A number of analysts have been ratcheting down their long-term trend GDP growth forecasts, with one well-known house finally reducing theirs from 2¼% to 1¾%. And the cuts are not over yet.
Those still predicting a return to 2½ - 3% long-term GDP growth are essentially betting that productivity growth will rebound to its post-World War II average - around 2¼% per year, even though it has averaged only ½% a year for the past four years. Indeed, we are now in what one could call a "productivity recession" - back-to-back quarterly declines in productivity.
This puts the Fed in a bind: as falling trend growth caps bond yields, how much can they really tighten before parts of the yield curve invert?
Econintersect wants your comments,
data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.
Print this page or create a PDF file of this page
The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.
Take a look at what is going on inside of Econintersect.com