The pace of economic progress in America has been just shy of miserable over these past few years. Sure, the stock market is booming, unemployment (until COVID) had reached a half-century low, and most Americans were satisfied with the state of the economy and their personal financial and material well being. None of this is wrong and none of it is meaningless. But that is not what this article is about.
For over a decade now, productivity growth has been just short of dismal. Before COVID hit us, we were only just starting to climb out of the depths of an economic doldrum. It wasn’t always this way. Ten-year growth in American labor force productivity reached its highest level ever in 2005. From 1995 to 2005, labor force productivity grew by over a third! By comparison, from 2009 to 2019 LFP grew by just over a tenth. Even in the last two years of Trump’s administration when our economy has supposedly been the “greatest ever,” LFP has grown by just 0.9% a year on average.
I think what journalists, economists, and politicians are missing today is some historical perspective. If you were an economist looking at growth data in 1982, you would be one depressed economist. The 1960’s saw 3% annual productivity growth, completely out of reach of the 1980’s, which had begun with growth rates in the tenths of a percent.
Thanks not only to poor policy but unprecedentedly weak leadership coming out of D.C. with respect to the public health and economic crisis, the decade from 2015 to 2025 will probably be remembered as a period of particularly great misery. We’re entering a new decade with eight digit numbers of unemployed and uninsured Americans, and barring an act of Congress, probably hundreds of thousands more homeless families by the end of the year. Sound familiar?
Our society entering the 1930’s and 1980’s didn’t feel much better about its prospects. But as we know today, decades that followed these low points were periods of historical and unprecedented prosperity. Shared prosperity. Rapidly declining, poverty, growing home ownership and wages, and substantial household wealth. America was the largest, richest, most prosperous economy on earth. In the year 2000, then-President Bill Clinton told America in his State of the Union Address that it was “fortunate to be alive at this moment in history.” He was not wrong.
However, Bill Clinton was wrong about a few things. The U.S. would go on to triple its public debt from 2001 to 2013, not eliminate it. The longest period of continued economic growth would end abruptly, the stock market would take a decade to reach new highs (and then another half-decade after that), and Americans would once again be pessimistic about the future of the country.
Today we are experiencing a low point, which is occurs every so often. When we look ahead, we see that there are converging factors that make growth and prosperity very likely in the coming decades. Science continues to march forward at a great pace. Disruptive new technologies are spurring creative destruction not seen since the turn of the 18th century into the 19th. The real cost of energy is projected to fall substantially by 2050 thanks a shift towards high-tech clean energy like solar, wind, advanced nuclear, and zero-emission natural gas.
Our great technologists and industrialists of the day like Elon Musk and Jeff Bezos show us a future where humanity reaches for the stars; where are people are free from the confines of the earth and the human body. They drive us towards a future with technologies like clean energy, clean transportation, artificial intelligence, among other things. There is no reason to doubt that at some point over this next half-century we will experience an acceleration in growth and opportunity like we’ve seen in the past.
My message is simple: stay optimistic! I’m sure that in forty years, our kids and grand kids will ask the same things we did now and over the last ten years. Is prosperity over? Is sluggish growth truly here to stay? Have we reached a permanently low plateau? Today I don’t think we can make that call yet. I believe that if there’s any thing the past can tell us, it’s that better days always lie ahead.