Prominent economists on failing U.S. economic growth
To hear a number of prominent economists tell it, it doesn’t look good for the U.S. economy, not this year, not in 10 years.
Harvard’s Martin Feldstein said he believes the outlook for U.S. economic growth in 2011 is less sanguine than many believe. First, the boost to growth from government spending will be drying up this year, he said. Woes from the dire situations of state and local governments may actually be a drag on growth, he added.
In the long run, the United States must face up to inevitably being overtaken by China as the world’s largest economy. And it may have missed a chance to rein in its largest financial institutions, many of whom remain too big to fail and are getting bigger.
Most estimates put the size of the Chinese economy on par with the United States by the early 2020s, said Dale Jorgenson, also of Harvard. The United States will need to come to terms with the fact that its prevalence in the world is fated to come to an end, Jorgenson said. This will be difficult for many Americans to swallow and the United States should brace for social unrest amid blame over who was responsible for squandering global primacy, he said.
MIT’s Simon Johnson put it more bluntly, saying the damage from the financial crisis and its aftermath have dealt U.S. prominence a permanent blow. “The age of American predominance is over,” he told a panel. “The (Chinese) Yuan will be the world’s reserve currency within two decades.”
Johnson said he believes the United States has failed to learn its lesson from the financial crisis and continues to implicitly back its largest financial institutions.