Tesco
Understanding the New Normal
Report

Understanding the New Normal

The Role of Demographics

Etienne Gagnon, Benjamin K. Johannsen and David Lopez-Salido
Federal Reserve Board, 2016
Get the Report

Read or listen offline

audio autogenerado
  • 0.5×
  • 0.75×
  • 1×
  • 1.25×
  • 1.5×
  • 1.75×
1×
audio autogenerado

Editorial Rating

7

Qualities

  • Analytical
  • Innovative
  • Scientific

Recommendation

GDP growth in the United States continues to slog forward at a pace far below its long-run historical average of about 3% annually in the years following World War II. Particularly troubling is the anemic recovery following the Great Recession. Despite the Federal Reserve’s attempts to boost the economy, strong GDP growth remains elusive. Economists Etienne Gagnon, Benjamin K. Johannsen and David Lopez-Salido contend that constrained US growth is the result of an entirely predictable outcome based on demographic patterns. getAbstract recommends their scholarly report to executives and investors interested in understanding this “new normal.”

Take-Aways

  • The Federal Reserve’s attempts after the Great Recession to invigorate the US economy through extraordinarily accommodative monetary policy have yielded lackluster results.
  • Demographic shifts in “fertility, labor supply, life expectancy, family composition and international migration” statistically explain 1.25 percentage point reductions in both real GDP growth and in the “equilibrium real interest rate” since 1980.
  • Baby boomers’ entry into the workforce during the 1960s radically expanded the labor participation rate, particularly among women, leading to increased levels of capital, greater productivity growth, stronger GDP numbers and higher real interest rates.

About the Authors

Etienne Gagnon, Benjamin K. Johannsen and David Lopez-Salido are economists with the Board of Governors of the Federal Reserve System.

Comment on this summary or Comenzar discusión