Life seems to flow a little easier when we have things we can count on. Perhaps it’s that hot cup of coffee from the corner shop each morning or football games on Sunday afternoons. It might be the same old haircut from your barber or a weekly phone call from a close friend.
For most of my life, I have viewed a strong economic growth rate in America as a given—as reliable as the rising sun. Historically, it has been something that we could count on, and America has prospered as a result.
I wonder now, however, if that dependability is gone.
The growth rate has gone up and down at times, but has generally settled into a rate of about 3.3% annually since the end of World War II. This growth rate is the envy of the world, and the main driver of American prosperity.
But since 2007, our growth rate has sputtered, leaving experts to wonder whether we’ll ever get back to the solid rate of growth that we’re used to.
The U.S. Chamber of Commerce Foundation partnered with noted economist Douglas Holtz-Eakin on a sobering report, The Growth Imperative: How Slow Growth Threatens Our Future and the American Dream, that outlines our historic rates of growth and ominous projections for the future.
Citing figures from the Congressional Budget Office (CBO) Holtz-Eakin reports that since 2007, annual economic growth in the United States has averaged a mere 1.5%—less than half the annual average from the previous 50 years. Moreover, the CBO projects a 2.5% annual growth rate over the next 10 years.
In other words, we’re in for another decade of growth that’s nearly a full percentage point lower than what most of us have seen throughout our lifetimes.
On paper, this may not seem like a big deal. What’s the significance of a single percentage point, anyway? The significance is that increasing growth from 2% to 3% over the next decade is, in fact, a 50% increase in our rate of growth. Over time, that higher rate of growth has an enormous positive impact on the quality of life for all Americans.
One percentage point of increased average annual growth can mean a 10% increase in the standard of living for the middle class. It’s the difference between renting and buying a home. It means having the money to send your kids to college or being able to take a vacation. For older Americans, it means retiring in comfort.
Growth also plays a large role in our ability to chip away at our massive national debt, and it has a big impact on employment. Boosting the growth rate from 2.5% to 3.5%—a single percent—could lead to more than 2.5 million additional jobs over the next decade.
Getting America back on a path of solid growth will not be quick or easy and will require public policy efforts on a number of fronts that include changes to our nation’s immigration system, a job-creating energy policy, and reforms to our entitlement programs.
The Foundation continues its hard work on a wide range of programs centered on building skills and promoting innovation, all supported by our belief in the power of the free enterprise system.
I am personally concerned about what the currently forecasted GDP growth figures mean to the future of our nation. In the coming months, one of my top priorities will be to share the details of our report and engage in serious discussions about why growth matters to everyone in America.
Because as the American economy grows, everyone’s life gets better. You can count on that.
John R. McKernan Jr. is senior adviser to the U.S. Chamber of Commerce Foundation.