The New Normal: 2% growth vs 3% growth (via NPR)

[paparush]

The US economy grew at an annual rate of just under 2 percent, which is below the average for the last half-century when the U.S. economy grew about 3 percent each year. And although it may not seem like much, that 1 percentage point makes a big difference — influential analysts are saying we're in for a "new normal."

"The difference between 2 percent growth and 3 percent growth is of major importance and has major implications for the entire economy, for financial markets, for the budget," he says.

And the heart of the problem is job creation. Crescenzi and his colleagues argue that the U.S. economy could actually grow 2 percent a year without adding any new jobs. That's because the productivity of current workers is rising at about 2 percent a year.

"In other words a company can produce 2 percent more goods and/or services a year even if it doesn't increase the number of people it employs," he says.

"In a 3 percent world we'd create roughly 1.6 million jobs a year," he says. But he says that in a 2 percent world, job creation would be less than half — around 700,000 jobs. "That would not be enough to absorb the increase in the labor force each year and therefore the unemployment rate would rise," Zandi says.

Incomes would also be affected. Zandi estimates that in a 2 percent world the average household income would increase $17,000 less over a decade than it would in a world of 3 percent growth.



http://www.npr.org/2011/07/12/137708256/what-the-new-normal-means-for-americans

[Angry Dragon]

1. More good news

pawlenty said if he was elected president he could get 5% growth for 10 years
must be because god is on his side