by Brink Lindsey
October 10, 2013
For over a century, the trend line for the long-term growth of the U.S. economy has held remarkably steady. Looking ahead, however, there are strong reasons for doubting that this historic norm can be maintained. Consider the four constituent elements of economic growth tracked by conventional growth accounting: (1) growth in labor participation (2) growth in labor quality (3) growth in capital deepening, or the amount of physical capital invested per worker; and (4) growth in so-called total factor productivity, or output per unit of quality-adjusted labor and capital. In the 21st century all growth components have fallen off simultaneously. In other words, growth is getting harder. Consequently, policies that are more friendly to long-term growth will be needed if more robust growth is to be revived.