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America's 'scary' GDP warning
The days of four or five percent growth rates in the States could be over. That's according to research by Morningstar's Bob Johnson. It’s all down to population growth which has dropped to its lowest level for fifty years. The research is “a little scary”, according to Bob.
Using the correlation between population growth and GDP, Johnson is able to forecast GDP figures for the US economy. Historical data from the past 50 years serves as a baseline for his analysis. He explains the correlation citing a peak in population growth at 1.8 percent that coincided with a 6 percent growth rate in GDP a few years later. Population growth is always the preliminary indicator of future swings in GDP growth.
Johnson claims that US GDP will likely remain around 2 percent, as population figures continue to falter. Estimates that the US could experience 4 percent GDP growth in the next few years appear to be exaggerated based on historical trends.
01:43 minutes
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