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Robert Romano: Era Of Economic Growth Over?

WHERE WILL THE LATEST GLOBAL SLOWDOWN LEAD US? The economy of Japan has not grown nominally in 20 years, according to data published by the Statistics Bureau of Japan. Nor has its population aged 15 to 64 —those in the prime working years of their lives — which has declined from…

WHERE WILL THE LATEST GLOBAL SLOWDOWN LEAD US?

The economy of Japan has not grown nominally in 20 years, according to data published by the Statistics Bureau of Japan.

Nor has its population aged 15 to 64 —those in the prime working years of their lives — which has declined from 86.9 million in 1995 to 76.7 million today.

Inflation has barely budged, too, averaging just 1.1 percent a year over the past 20 years, even with a torrent of monetary expansion by the Bank of Japan.

Interest rates have also declined on a long-term basis, from an average of 3.4 percent in 1995 to just 0.04 percent today. Those may even go negative in the near future, chief bond strategist at Tokai Tokyo Securities Co., Kazuhiko Sano, predicts. Sano accurately called the rate dropping below 0.5 percent, 0.25 percent and 0.1 percent.

Just imagine that. For the privilege of lending money to the Japanese government, it costs banks and investors money. The only way it might pay to buy the bonds is in an outright deflationary environment, prices declined even faster than the interest rates. But even then, keeping cash would seem to be a better deal.

It all coincides with the Bank of Japan charging banks for excess reserves with a negative interest rate.

Is the Bank of Japan forecasting deflation in Japan? Certainly wouldn’t be the first time.

But in a broader context, do the rapidly falling interest rates project a no-growth, or slow-growth environment?

Certainly something to question over here in the U.S., where the economy has not grown above 4 percent since 2000, and not above 3 percent since 2005, according to the Bureau of Economic Analysis. As for 2015, it came in at a tepid 2.4 percent growth.

The average annual growth from 2006 to 2015 was 1.41 percent, the worst decade since the Great Depression.

U.S. 10-year treasuries stand at just 1.75 percent.

The consumer price index only increased 0.7 percent in 2015.

The working age population in the U.S. has certainly been slowing, and will be growing at an even slower pace for the next few decades.

The labor force participation rate for 16- to 64-year-olds has not been faring much better, according to data compiled by the Bureau of Labor Statistics. It peaked in 1997 at 77.37 percent and has dropped to 72.61 percent in 2015, accounting for 9.7 million people who otherwise might have been in the labor force since then but are not.

Note that excludes those of retirement age, correcting for drops in labor participation associated with Baby Boomers retiring. Yes, that has reduced the participation rate some, but so has the working age population exodus from the work force too.

What emerges is a spiral of slower growth, less asset price appreciation, lower interest rates and fewer jobs.

What’s to like?

But worse still, could this point to a longer trend where the global economy itself is slowing down until, one day, it stops growing all together?

Is the era of growth ending? Never mind the de-growth movement.

Perhaps Japan and Europe, too, which is in a similar stagnation, are just windows into the future.

What is most alarming, however, may be the declines the U.S. is seeing in labor participation. Slower growth might be seen as a benign indicator if it still proportionately produced the same number of jobs.

But it is not, with the 16- to 64-year-old labor participation rate dropping to levels not seen since 1981 when women were still entering the work force. Slower growth has been toxic.

All this, after the U.S. has invested hundreds of billions of dollars in college educations with students with tens of thousands of dollars of debt predicated on the idea that there would be enough jobs for everyone. Well, there aren’t, every year it keeps getting worse and we need to start asking ourselves why.

Robert Romano is the senior editor of Americans for Limited Government.  His column, reprinted with permission, originally appeared on NetRightDaily.

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15 comments

Rocky Verdad February 9, 2016 at 1:40 pm

Ya know, this guy gets old. So here’s the deal. Last year we grew at what, about 2.8%? Year before that about 2.6%. Let’s keep a few things in mind here. About 25% of US trade is with Canada, about 20% with China, 20% with Mexico, and about 20% with Europe. The rest is a mix with some other emerging markets and Japan.

China is having a slowing economy. Europe has been three times as slow as the US in coming out of the great crisis of 2009. Extremely slow. Brazil is having a slow down. Point is this: a) the world economy has never pulled the US into a recession in 70 years, in fact, the US is stil lthe driver of the global economy. b) These regions slow growth is probably taking off about 1% in GDP growth.

If you look at the US economy in three parts, real estate, consumer spending and trade, you can see why we’re at just below 3%. Real estate is now humming, consumer spending is doing well, but – – – – – or trading partners are still a bit sickly. Eventually that will change, and then we’ll be back to 3.5% growth. These comments about 4-5% growth – just remember – 4.5% growth and higher is inflationary. So pick your poison.

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9" February 9, 2016 at 2:19 pm

And,who else can cover,Eric Dolphy,and get away with it,brilliantly?
https://www.youtube.com/watch?v=yghMY6hx1r4

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sparklecity February 9, 2016 at 2:50 pm

Good points all.
I know you have your economic ducks in a row (that’s pretty evident) but there is one thing I’d like to inject concerning the economy(if I may…)
THIS IS TUESDAY AND TUESDAY IS SOYLENT GREEN DAY!!!!!!
(it’s closer than you may think……… and will be brought to you by the conservative elites who are members of “Americans For Limited Government”)

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Rocky Verdad February 9, 2016 at 3:23 pm

What is Soylent Green Day.

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9" February 9, 2016 at 3:55 pm Reply
Rocky Verdad February 9, 2016 at 4:32 pm

I’m too young I guess. I was only like 7.

9" February 9, 2016 at 5:29 pm

Chalton Heston is half clothed most of the time,and he’s hairy.He made me gay.Don’t watch too long

sparklecity February 9, 2016 at 7:43 pm

LOL!!!
But I believe you’re thinking of Planet of the Apes…not that I noticed all that much since “Nova” was running around in a leather bikini the whole time……….

9" February 10, 2016 at 12:33 pm

You’re right. Soylent Green was a better movie IMO

sparklecity February 9, 2016 at 7:35 pm

Then it’s time you got some “edgamacation” on one of the most prophetic films of its time………..

Leigh Taylor Young is fine (as is the black woman – she was a professional dancer in her time {it shows!!!} and also was in Andromoda Strain, and a “Bond Girl” {went by the name of “thumper” if I’m not mistaken})))

Good flick on a lot of levels. There was talk of a remake but so far it ain’t happened (wish they would though…..)

“Soylent Green wafers WERE available on line a few years back.
Check it out sometime. You can probably even get it for free at the local library on DVD as well as streaming…

idcydm February 9, 2016 at 3:40 pm

Figures don’t lie but liars figure, is the National Debt really $19 Trillion Dollars?

Now I’m not saying those are your figures Rocky but from my experiences I take government figures with a grain of salt.

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Flip February 9, 2016 at 2:35 pm

Man the constant wishing of the economy to tank by these guys for political gain gets older and older each time.

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sparklecity February 9, 2016 at 2:44 pm

Couldn’t agree more……..

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Rocky Verdad February 9, 2016 at 3:32 pm

Since it’s an article of dribble and stupidity, all I have to say is I thought Beyonce was pretty good in the half-time show, but she is a bit chunky in the thighs. But not bad at all.

And I think we’re a stupid country with our currency. I have a money clip that’s magnetic I bought down at the market. I love it, black leather, magnets that hold each half together. But we’re stupid. We make out change out of copper. In Canada they use steal, and same in many South American countries. As a result, when I’m in those areas my money clip attracts and holds all the change together, avoiding that “grandpa jingle” in my pockets. Here in the US – I sound like change machine walking around. Hence, I’ve stopped carrying and using cash.

I know this is as interesting as a tick in your ass, which is how factual and intersting this article was.

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Bible Thumper February 9, 2016 at 4:33 pm

US Real Gross Domestic Product per capita — chained 2009 dollars (inflation-adjusted).
US Real GDP divided by US population.
http://www.multpl.com/us-real-gdp-per-capita/table/by-year

We may hay have a problem with income distribution, but the average is continuing to rise. The 2007 level was passed in 2014. Maybe our wealth has not recovered, (home equity etc…) There has been slow improvement the last 6 years.

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