The United States is unlikely to see economic growth above 3 percent in the next five years, while developing economies grow more than 5 percent, says Byron Wien, senior managing director of private equity titan Blackstone.
“The biggest problem the U.S. is facing is the productivity of capital,” he wrote in the Financial Times.
“After the end of the second world war, it took less than two dollars of investment by government, corporations and individuals to produce one dollar of GDP growth.”
By the end of the 1980s, it took about three dollars. Then things really got bad in the last 10 years.
“Because of profligate spending on over-priced housing and other assets that declined seriously and deficit spending by the government, by the end of the decade it took six dollars of capital to produce a dollar of growth,” Wien wrote
That compares to about two dollars of capital for Europe and a dollar for China, he says.
To stop losing ground we have to invest more effectively.
“We must continue to take advantage of the commercial possibilities of innovation. If we don’t . . . our standard of living will decline,” Wien wrote.
One expert who doesn’t see much hope is New York University economist Nouriel Roubini.
“The U.S. economy is going to be sluggish, the labor market is going to be sluggish," he predicted on CNBC.
© 2017 Newsmax Finance. All rights reserved.