By Jim Clifton
Chairman and CEO of Gallup
The U.S. Council on Competitiveness asked Gallup to conduct, pro bono, a comprehensive study of U.S. growth and productivity for the Council’s 30th anniversary. We enthusiastically said yes.
A Gallup senior economist led the study. Top Gallup experts and esteemed external senior scientists reviewed it to ensure statistical and theoretical accuracy and objectivity.
Conventional wisdom — as reported in many major newspapers and media — tells us the U.S. economy is “recovering.” Well-meaning economists, academics and government officials use the term “recovery” when discussing the economy, implying that growth is getting stronger.
The study, released today, finds there is no recovery. Since 2007, U.S. GDP per capita growth has been 1 percent.
The Great Recession may be over, but America is dangerously running on empty.
Think of our country as a company, America Inc., which has more than 100 million full-time employees, with about $18 trillion in sales and $20 trillion of debt. The most serious problem facing it is no growth. In addition, America Inc. has three soaring expenses threatening to bankrupt the company and its shareholder-citizens: healthcare, housing and education.
As this report notes, in 1980, these three sectors accounted for 25 percent of total national spending — today, they account for more than 36 percent. They also account for most of the total measured inflation over the same period. And without inflation in these sectors, real annual productivity — defined as GDP per capita growth — would have been an estimated 3.9 percent instead of 1.7 percent.
My own opinion is that America Inc. is too big to “turn around” like one would a company or any other organization. There is no quick fix to something this huge and complex. But there is a long-term fix, which is to get GDP increasing to 3 percent and higher while slowing the increasing costs of healthcare, housing and education.
When real growth returns, productivity will increase, and America Inc.’s empty tank will refill.
Jim Clifton is chairman and CEO at Gallup.