Former Federal Reserve Chairman Alan Greenspan says productivity growth has slowed "very dramatically," suggesting slower U.S. economic growth in the near future.

The aging population and an increase in Social Security benefits slows the rate of saving, driving capital investment down, and slowing productivity, he told Blomberg Television

"I'm very much concerned about this and I don't know how we're going to get out of it very quickly," Greenspan said.

"Productivity in the most recent data is at 1% a year. That is down very significantly from earlier periods and it's beginning to show up in ways which suggest the intermediate period ahead of us is going to be a period of slow economic growth," Greenspan said.

"If you curtail gross domestic savings, you will also curtail gross domestic investments, which is the key to economic growth, because fundamentally it generates all of the economic activity that we get in the capital good markets," Greenspan said. "So I'm very much concerned about this and I don't know how we're going to get out of it very quickly."

Greenspan warned that the aging population is a "fundamental issue" in the economy. He said while the COVID pandemic will "ultimately disappear," againg generations will not.

He said the U.S. needs to find the political will to tackle the problems he believes are holding back growth: out-of-control government spending on entitlement programs and ill-considered regulations.

Other respected financial voices apparently agree with Greenspan's dismal economic predictions.

Federal Reserve Vice Chair Richard Clarida said earlier this week that the U.S. economy is rebounding strongly after taking a big hit because of the coronavirus pandemic, but it may be another year before the economy returns to pre-crisis levels and take even longer for the labor market to recoup lost ground.

"While recovery since the spring collapse in economic activity has been robust, let us not forget that the full economic recovery from the COVID-19 recession has a long way to go," Clarida said during a virtual discussion organized for the American Bankers Association Convention. Reuters reported.

The pandemic threw the U.S. economy into a "very deep hole" and despite recent improvements, the outlook is "unusually uncertain," Clarida said.

• Greenspan: Inflation 'Inevitably Going to Rise' 
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