He listed a number of factors that could continue to restrict the economy: slower growth in the labor force, slower productivity growth, a rise in risk aversion, higher costs for financial services, and low rates of growth in consumer spending because so much income is now earned by the very rich, who have higher savings rates.
James Stock and Mark Watson, economists at Harvard and Princeton, respectively, wrote in a recent paper that economic growth will continue to be sluggish because the labor force is growing at a slower rate.
The economy is projected to grow more slowly, primarily because of slow growth in the labor force.
From a political perspective, the slow growth of the labor force suggests that President Obama has, to some extent, caught a lucky break.
DealBook » When Looking at Job Numbers, Add In a Changing America | With growth in the American labor force slowing, in part because of demographic changes, the usual measures may not give an accurate picture of the economy's health, Floyd Norris reported.
Other estimates are smaller, but whatever the actual figure is, it's a large one, as indicated by the slow growth in the labor force — people working or actively looking for work — and a sharp decline in the labor-force participation rate.
Far from racing ahead to make up the ground that has been lost since the Great Recession, the United States is still being held back by slow growth in the labor force and in capital investment, which both reflects and reinforces the tendency toward mediocre economic outcomes.
Slowing growth in the labor force, as well as in labor productivity, will pull the U.S. economy's potential growth from 3.5% in recent memory to only about 2.0% over the next several years.
