As Boomers Slow Down, So Might the Economy

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Letter Writer:

Steve DeHoff, a staff consultant at the Cincinnati office of Stress Engineering Services Inc.

Date Posted:

July 10, 2007

Letter:

I found this article helpful and agree with its results. I personally looked at this topic about 18 months ago as part of presentations I make within the plastics industry discussing future trends and their impact on the plastics business. My own approach looked at population growth vs. real GDP growth from 1789 through to current and productivity growth from about 1890 to current. The real GDP vs. population growth data suggested about a 70 percent pass-through of population growth into GDP, which I presumed represented the difference between population growth and work force growth (work force being less than population). Productivity growth was a remarkably stable (statistically) 2.1 percent with lots of volatility but not much drift in the mean. My result was also around 2.2 percent going forward in these conditions. I'm pleased to see that I'm not completely out of school. The Economist recently suggested 2.5 percent on a more-near-term basis. Beyond that, I note the International Energy Agency 2007 World Energy Outlook used a 2015-2030 average of 1.9 percent. The point for my plastics audiences is it is almost certainly wrong to expect growth in the future that resembles the past half century unless something very fundamental changes. I suspect many people will be unhappily surprised by these developments when the reality finally roosts.

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