Click to enlarge.
I hope they didn't spend too many man-hours coming up with those long-term future estimates. I managed to do it in a few minutes by simply extrapolating the past two bubbles (and adding the point heading into the recession of the early 1990s for extra stability).
Although the Congressional Budget Office clearly acknowledges the declining long-term potential growth in nominal GDP (much like I did with my trend line), they appear to be a bit overly optimistic looking forward.
That's assuming that you find it as hard to believe as I do that we can stick to that red trend line for 7 years in a row (from 2018 through 2024) without another recessionary linear trend failure occurring.
Further, if it takes ever larger "bubbles" to unlock the true declining nominal "potential" of our economy, then we are seriously @#$%ed over the long-term. What if we can't think up enough suitably epic bubbles to inflate? How could we make it back to the declining trend line?
In the meantime, might as well come up with something else to believe in, just so we have a backup plan.
February 23, 2010
The Earth is flat? What planet is he on?
"I haven't taken this position just to be difficult. To look around, the world does appear to be flat, so I think it is incumbent on others to prove decisively that it isn't. And I don't think that burden of proof has been met yet."
Does the chart in this post prove that our country is in decline? Not really. Perhaps it would be best to just ignore the evidence then and pretend it does not exist. See? Doesn't that make things feel better?
See Also:
Real Potential GDP Growth: 75 Years of Bad Weather So Far
Source Data:
St. Louis Fed: Custom Chart
Lack of growth is not necessarily being screwed.
ReplyDeleteThe US taxes at half the level the nordic europaradises do.
We just need to get over ourselves that we're so special that 3rd grade math doesn't apply to us or our budgets.
Tea Party wants balanced budgets, I'll give them balanced budgets.
Top 10% of this country is paying a 19% tax burden . We could double that. Well, we could if half the country still had a functioning brain.
Troy,
ReplyDeleteLack of growth is not necessarily being screwed.
Not necessarily, but it would to a ponzi system. Are pension funds still assuming 7.5% growth over the long-term? Sigh.