Vanguard Chief Economist, Joe Davis looks at economic growth trends and what they might mean for the future.


Great question.  Really focuses on what normal is.  I mean, clearly, the past decade we haven’t grown by normal standards.  Historically, the U.S. economy has grown roughly 3.5, 4% adjusted for inflation; past ten years we’ve been half that pace.

But trends also, historically, have never been permanent and that’s large part because productivity ebbs and flows through time. We are clearly at a low point, but when I look at the private sector and its ability to innovate, and in many industries I look at, their pace of innovation is accelerating not decelerating.  So when I put that altogether, even with the fiscal austerity in store, potentially, over the next several years, I would imagine at some point over the next three to five years, we are talking about a higher growth trajectory for the United States.