Why US growth is stagnant even though unemployment is significantly low . Not only US but all developed nations are facing this problem. Is limited population the cause of this , I mean lower human resources.


3 Answers 3


Not necessarily. One has to distinguish between (output - I just assume that you mean output, i. e. gdp) growth and per capita growth.

In (very) simple terms: Growth is the result of either population growth, capital accumulation (more investment) or technological progress.

So one reason for the low US growth could be limited population growth and looking at the data this is a possibility (Population Growth Rate US)
Another possibility might be the "unusability" of technical progress. While a lot of research is done and we discover lots of new things not everything can be used in the production progress and is therefore not reflected in gdp growth.

One way to check this possibility is to development a new measure of technical progress - I think Daron Acemoglu and some coauthors are working on a new index. Another possibility is that this technical knowledge is just worthless. Consider the internet rush around 2000 which was at that time considered as technical progress which would increase the productivity of the whole economy... Well most of this was wrong and this technical progress did not lead to an increase in productivity - an argument often used by Robert Solow.

So the question: "Why is a nation not growing" is pretty difficult and not easy to answer or even understand.

  • $\begingroup$ Linked to the idea of "unusable" technical progress is "unmonetisable" technical progress. If people used to buy encyclopaedias and software, and now use Wikipedia and open source, that implies a fall in GDP. $\endgroup$
    – Dan
    May 8, 2018 at 11:20
  • $\begingroup$ I recommend the nobel prize lecture by Douglass North to be more accurate. The result of his research is that the main source for growth is the appearence of new markets. There are a lot of reasons for new markets to appear: social, technical, political, wars, natural causes, etc and combinations of them. $\endgroup$
    – giftnuss
    Jul 6, 2018 at 22:33

Growth rates tend to fall down or become stagnant , once a country reaches certain stage of development. Developing countries have higher growth rater because they are catching up with the developed countries.


Possibly, eternal rapid growth is not possible.

Possibly, 1% growth in real GDP per capita (correcting for population size and inflation) is an achievement when you're already rich.

However, in the sense that some might expect growth to be slower, it can be pointed out that a large number of workers are not trained for post-industrial jobs, and this limits the possibility of the various companies in the economy to effectively deploy those available human resources. These workers may become "discouraged" (stop looking for work) not be counted among those actively seeking employment.

Also, there is an argument that rapidly reduced cost of leisure is causing many men to play video games (for example) and work less. If they are not actively seeking work, they are not counted as "unemployed".

Also, increasing industrial concentration tends to reduce competition, which negatively impacts the competitiveness of those firms internationally, thus negatively affecting both employment and growth (while positively impacting profits, at least in the short-run).

Other similar arguments are at times packaged together under "situations in which higher inequality is bad for growth".


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