Jeremy Grantham offers most-depressing forecast ever

GMO strategist says 3% annual GDP growth now history; 'unpleasant facts'

Nov 20, 2012 @ 3:01 pm

By Dan Jamieson

The U.S. will be stuck in a permanent slow-growth mode of about 1.4% per year, says Jeremy Grantham, GMO chief investment strategist.

“The U.S. GDP growth rate that we have become accustomed to for over a hundred years – in excess of 3% a year – is not just hiding behind temporary setbacks. It is gone forever,” Mr. Grantham wrote in a quarterly update today.

“When the debt is repaid and housing is normal and Europe has settled down, most business people seem to expect a recovery back to America's old 3.4% [real] growth trend, or at least something close. They should not hold their breath,” he wrote.

Driving the permanently lower growth rates are several long-term trends, Mr. Grantham said. At the top of the list: Lower population growth of less than 0.5%, which is down from more than 1.5% since the 1970s. The GMO strategist also pointed to low and declining growth in service productivity, as well as rising resource costs. In addition, he cited lackluster growth in man-hours worked annually, which he estimates will rise only 0.2% a year.

“Attitudes to change are sticky,” Mr. Grantham said. “We cling to the idea of the good old days with enthusiasm. When offered unpleasant ideas (or even unpleasant facts) we jump around looking for more palatable alternatives.”

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

What's the first thing advisers should do when they get home from a conference?

After attending a financial services conference, advisers can be overwhelmed by options, choices and tools. What's the first thing they should do when they get back to their office?

Latest news & opinion

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

8 apps advisers love for getting stuff done

Smartphone apps that advisers are using in 2018 to run their business more efficiently.

Galvin's DOL fiduciary rule enforcement triggers industry plea for court decision

Plaintiffs warned the Fifth Circuit that Massachusetts' move against Scottrade signaled that the partially implemented regulation can raise costs for financial firms.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print