Insights from Our CEO: Four Reasons Why Secular Stagnation Does Not Describe the US

  • by ITR Economics - Thu, 05/24/2018 - 09:52
Brian Beaulieu

Disclaimer: I am a capitalist. I believe in the capitalist system. Not perfect but better than any alternative.

“Secular stagnation” is meant to describe a market-based economy that experiences slow growth or no growth. Secular is used to imply a long-term condition as opposed to the cyclical variety with which we usually deal. The reasons for fearing or prognosticating no-growth scenarios vary depending on your economic philosophy. They typically include concepts like: too high of a savings rate, no growth in the population, and unemployment is too high. There is another reason we add to the list: inefficiencies. This could be government intervention under many guises, but it is generally made manifest as socialism, or perhaps a form of socialism.

Japan has been through a prolonged period of secular stagnation. It could be claimed that Europe is in the early stages of secular stagnation. Some folks are tempted to say that the list includes the US because we are not growing as fast as we used to on an average per annum basis. Some advocates of this economic label like to use it as a reason why the government must intervene even more into the economy. This is an interesting twist because from our perspective it means infecting the patient with more of the cause of the illness. Planned economies (think Russia) are more likely to be plagued with this economic malady than market-based economies because of their demographics and state-sanctioned inefficiencies.

Attributing this condition to the US is a mistake because:

  1. Our population is growing
  2. We are seeking ways to become more and more competitive
  3. We excel at getting around the roadblocks governments impose
  4. We have a wealth of diverse natural resources that many other economies can only dream about


The US will continue to grow in real dollar terms, at an average per annum rate, superior to Western Europe, Russia, and Japan over the next decade. Additionally, the US will still be the world’s largest economy in 2029.

Brian Beaulieu
CEO