US economy may only average 1.6 to 2.1% in GDP growth over the next ten years

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The quarterly GDP growth for the USA compared to one year ago is a lot smoother than the quarterly changes in GDP according to research data from the St. Louis federal reserve.

The US economy has been growing at 2.1 percent per year between mid-2009 and mid-2014.

Robert Gordon of Northwester University has developed a new and surprisingly simple method of calculating the growth rate of potential GDP over the next decade and concludes that projections of potential output growth for the same decade in the most recent reports of the Congressional Budget Office (CBO) are much too optimistic. If the projections in this paper are close to the mark, the level of potential GDP in 2024 will be almost 10 percent below the CBO’s current forecast. Further, the new potential GDP series implies that the debt/GDP ratio in 2024 will be closer to 87 percent than the CBO’s current forecast of 78 percent.

Here is a 12 page report of Robert Gordon’s work from 2012 which is similar to his 2014 work about lower GDP growth in the USA.

If the USA has weaker GDP growth it will be easier for China’s economy to surpass the USA on a nominal GDP basis.

Seeking Alpha has the CBO and Robert Gordon Projections in a chart.

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