Comments on: The Death of Demand – The Post-Consumer Debt Economy http://revolutionradio.org/?p=16297 Your Weapon of Mass Destruction Fri, 17 May 2013 13:44:13 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Tom Osenton http://revolutionradio.org/?p=16297&cpage=1#comment-33653 Tom Osenton Tue, 28 Jun 2011 21:48:13 +0000 http://revolutionradio.org/?p=16297#comment-33653 It's as simple as this: the U.S. economy is mature and rapidly losing steam. And economists and politicians must get their collective minds around that fact. This doesn't mean we are doomed. But it does mean that sustained GDP growth of 3 percent or more is pure folly. Can US GDP grow at 3 percent in a given quarter or even year. Certainly it can. But it will never ever grow at 3 percent - or even 2 percent - for an entire decade. Let's review: Average rates of growth for US Real GDP by decade: 1940s: 5.99% 1950s: 4.17% 1960s: 4.44% 1970s: 3.26% 1980s: 3.05% 1990s: 3.20% 2000s: 1.82% The rate of US GDP growth peaked in the 1960s! And has been trending down ever since. The minor exception was the 1990s when Personal Consumption Expenditures (PCEs) were driven by a) increased access to goods in the form of mind-numbing retail expansion; and b) consumer individuation - a cultural shift that supported the move toward individually-owned products (my room, my car, my phone, etc.). It was the PCEs on steroids period which drove the slight up-tick in overall Real GDP for the 1990s. The fact is that the US economy today is a 1% economy. That's it. Anyone who thinks that US GDP will grow at 2 percent or more for the decade 2010-2019 is delusional. I will wager $1 million with anyone who is willing to bet that the US economy will grow at 2 percent or more for the current decade. It will not. It’s as simple as this: the U.S. economy is mature and rapidly losing steam. And economists and politicians must get their collective minds around that fact. This doesn’t mean we are doomed. But it does mean that sustained GDP growth of 3 percent or more is pure folly. Can US GDP grow at 3 percent in a given quarter or even year. Certainly it can. But it will never ever grow at 3 percent – or even 2 percent – for an entire decade.

Let’s review:

Average rates of growth for US Real GDP by decade:

1940s: 5.99%
1950s: 4.17%
1960s: 4.44%
1970s: 3.26%
1980s: 3.05%
1990s: 3.20%
2000s: 1.82%

The rate of US GDP growth peaked in the 1960s! And has been trending down ever since. The minor exception was the 1990s when Personal Consumption Expenditures (PCEs) were driven by a) increased access to goods in the form of mind-numbing retail expansion; and b) consumer individuation – a cultural shift that supported the move toward individually-owned products (my room, my car, my phone, etc.). It was the PCEs on steroids period which drove the slight up-tick in overall Real GDP for the 1990s.

The fact is that the US economy today is a 1% economy. That’s it. Anyone who thinks that US GDP will grow at 2 percent or more for the decade 2010-2019 is delusional. I will wager $1 million with anyone who is willing to bet that the US economy will grow at 2 percent or more for the current decade. It will not.

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