Industrial Insight

just wondering | October 10, 2013

I was reading a report arguing that North American growth rates will slow. http://object.cato.org/sites/cato.org/files/pubs/pdf/pa737_web_1.pdf Economic growth depends on labor participation, productivity and investment. Investment has been declining for some time. My normal thesis is that declining prices of assets based on excess capital investment led to the decline. The graph I think argues for a more pervasive effect. It seems to suggest that declining interest rates and perhaps more social safety net programs have led to a systemic decline in savings. This is matched with a decline in investment. So we are over-leveraged and over-indebted and will pay for the high growth rates of the past couple decades with a slower growth rate to retire the excess debt?

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