In Search of Potential GDP
Tuesday, 25 June 2019
By Kan Chen and Shushanik Papanyan
With GDP growth slowing to 1.8% as a result of weaker demographics, lower productivity growth, and slower capital accumulation, we explore the question: will the future of U.S. potential growth be gloomy or bright?
Productivity growth, policies to boost the working age population, and stronger investments could be the answer, with the potential to lift GDP growth up to 2.7%. However, if current trends do not reverse and policymakers refuse to act, potential GDP growth could slow down to 1.2%.