Number: RS22775
Title: How Fast Can the U.S. Economy Grow?
Authors: Brian W. Cashell, Government and Finance Division 
Abstract: Gross domestic product (GDP) can be expressed as the product of five factors: the total population; the share of the overall population that is in the labor force; the share of the labor force that is employed; average labor hours per employee; and GDP divided by labor hours, which is labor productivity. Over long periods of time, the employment (unemployment) rate has had little to do with variations in the rate of economic growth, while the growth rate of the population has been gradually declining. At times the effect of declining population growth has been offset by surges in the share of the population that is in the labor force, as well as by increases in productivity growth. So far in the 2000s, overall economic growth can be mostly accounted for by just two variables, population and productivity growth. Growth in the labor force between now and 2050 is expected to be an average of about 0.6% per year. That, combined with current productivity growth trends, suggests future long-run economic growth somewhere between 2.1 and 2.4%.
Pages: 5
Date: December 17, 2007