World Growth Woes Makes For Best Sunday Newspaper Read
One central fact about the global economy lurks just beneath the year’s remarkable headlines: Economic growth in advanced nations has been weaker for longer than it has been in the lifetime of most people on earth.
The United States is adding jobs at a healthy clip, as a new report showed Friday, and the unemployment rate is relatively low. But that is happening despite a long-term trend of much lower growth, both in the United States and other advanced nations, than was evident for most of the post-World War II era.
This trend helps explain why incomes have risen so slowly since the turn of the century, especially for those who are not top earners. It is behind the cheap gasoline you put in the car and the ultralow interest rates you earn on your savings. It is crucial to understanding the rise of Donald J. Trump, Britain’s vote to leave the European Union, and the rise of populist movements across Europe.
As a matter of arithmetic, the slowdown in growth has two potential components: people working fewer hours, and less economic output being generated for each hour of labor. Both have contributed to the economy’s underperformance.
In 2000, Robert J. Gordon, a Northwestern University economist, published a paper titled “Does the ‘New Economy’ Measure Up to the Great Inventions of the Past?” It argued that the internet would not have the same transformative impact on how much economic output would emerge from an hour of human labor as 20th-century innovations like electricity, air transport and indoor plumbing did.
It was a distinctly minority view in that apex of technological optimism. “People said: ‘Productivity growth is exploding, Gordon. You’re wrong; we’re in a new age,’ ” Mr. Gordon said. But as productivity growth slowed several years later, “people started to take my point of view more and more seriously.”
He offers the example of the self-check-in computer technology that airlines use. When introduced in the early 2000s, it really did mean greater productivity: Fewer airline clerks were needed for every passenger. But the gain was more a one-time bump than a continuing trend.