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No Recession But A Slower Pace of Growth By Fulbright Financial Consulting, PA Thumbnail

No Recession But A Slower Pace of Growth By Fulbright Financial Consulting, PA

The latest data indicate the economy is not falling into a recession but is growing slower. If it feels like a snail’s pace, you should probably get used to it. The growth potential of the economy is the sum of the change in the working age population plus the change in productivity. That’s straightforward math. What’s it mean? Let’s break down the equation. Here’s the productivity side of the equation, the actual and expected change in the annual rate of productivity from 1948 through 2029. Productivity growth of the U.S. labor force has been in a slow decline over the decades. CBO, a non partisan research arm of the federal government, forecasts average annual gains in productivity lifting slightly to 1.9% through 2029. On the labor force side of the equation, the working age population exploded after world war 2 in the baby boom and peaked again in the late 1970s. Over the decades, growth in the labor force has gradually slowed, and it’s expected to continue to slow over the next decade. The consensus forecast of economists for a 1.7% growth rate for the next five quarters is indeed slower than previous decades, but it should come as no surprise. On the bright side, consumer spending and wages remain strong, and no recession is expected. And productivity in recent years has been much stronger than expected and accelerated sharply in recent months, and if the trend continues, the snail’s pace could get a surprise boost. Please contact us with any questions or to set up a meeting, and don't hesitate to share this video with people who might benefit from my work.