Robert Samuelson warns that the next economic surprise is a longterm one:
[Economist Robert] Gordon, a respected Northwestern University scholar, contends that mainstream economic growth predictions are wildly optimistic. His own calculations are more restrained. By 2024, he reckons, the economy’s annual output (gross domestic product) will be nearly $2 trillion lower — almost 10 percent — than projected by the Congressional Budget Office (CBO). Government debt will be 87 percent of GDP in 2024 instead of the CBO’s estimate of 78 percent. Disappointing output will also pressure the Federal Reserve to move earlier against inflation by tightening credit, he says.
The gist of Gordon’s argument is that the nation’s productive capacity — what economists call “the supply side” — will expand only slowly. It won’t keep up with the stronger consumer demand embodied in other forecasts. As a result, inflationary pressures will be higher and GDP lower. The “economy is on a collision course between demand-side optimism and supply-side pessimism,” he writes in a study released by the National Bureau of Economic Research.
Combine that projection of low growth with yesterday’s Scary-Ass Chart showing who has been benefitting from our economic growth, and together they detail the end of the American middle class.
At last, the Progressive dream made real.