According to the management books, firms, industries and even countries enter into growth phase, maturity phase and then finally to decline and depression phase. So is America facing a similar cycle this time too? Will it bounce back from the recession as it always did?
Couple of centuries ago the robust economic growth was fuelled by inventions and innovations. From the year 1750 to 1830 there were revolutions in steam and railroads. The 1900s surged with electricity, internal combustion, running water, indoor toilets, communications, entertainment, chemicals and petroleum. And the latest ones include computers, internet and mobile phones.
Gordon says “America faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9 percent annual rate experienced between 1860 and 2007. These include demographic trends like an aging workforce, gaps in the education system, rising income inequality, globalization, declining energy/environment resources, and of course, debt — held by the average American, as well as Uncle Sam.”
The baby boomers including women workforce have started to retire in this decade. And talking about fiscal cliff, even though Americans have cut household debt by about $1,3 trillion after reaching its record break level in the year 2008 the government still continues to borrow. Peter Zaleski, an economics professor from Villanova University says, “Government debt is the biggest drain on our productivity.”
So if United States still manages to get back on track, it would be treated as one of the greatest achievement in the world’s economic history.
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