- Former Fed Chair Alan Greenspan told Bloomberg that the US is entering a period of slowing economic growth due to a decrease in productivity.
- The aging of the population and an increase in social security benefits is contributing to this productivity slowdown, he said.
- “I’m very much concerned about this and I don’t know how we’re going to get out of it very quickly,” Greenspan said.
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Alan Greenspan told Bloomberg on Wednesday that productivity growth has slowed “dramatically” in the US and the economy will soon take a hit from this.
“Productivity in the most recent data is at 1% a year. That is down very significantly from earlier periods and it’s beginning to show up in ways which suggest the intermediate period ahead of us is going to be a period of slow economic growth,” the former chairman of the Federal Reserve said.
Greenspan said that the aging of the population is causing an increase in social security benefits, which is slowing the rate of saving, driving capital investment down, and slowing productivity.
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“If you curtail gross domestic savings, you will also curtail gross domestic investments, which is the key to economic growth, because fundamentally it generates all of the economic activity that we get in the capital good markets,” Greenspan said. “So I’m very much concerned about this and I don’t know how we’re going to get out of it very quickly.”
Greenspan called the aging of the population a “fundamental issue” in the economy. He said this is a problem that is not going to “ultimately disappear” as the coronavirus will.
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