The secular stagnation that never was?

Feb 23, 2018

Downbeat estimates of potential growth may be due for an upgrade just as the stars align for a productivity pickup - helping keep US economic overheating contained.


  • We find that estimates of potential growth are sensitive to cyclical conditions. The snail’s pace of the recovery made it harder to separate cyclical from structural forces – and the cyclical drags were interpreted as permanent damage.
    Estimates and perceptions of potential growth may now turn more positive as actual growth enjoys a sustained acceleration.
  • Productivity – an important driver of potential growth – has not kept pace with solid spending on research and development (R&D), implying pent-up gains that may soon be realised. Global integration also fosters productivity growth.
  • Better long-run growth should further lift real yields. Equities can still do well: Improved growth should also boost earnings in tandem, while abundant global savings should limit how high yields go.
Chart: Actual GDP and potential GDP estimates, 2004-2017
Jean Boivin
Head of Economic and Markets Research, BlackRock Investment Institute
Jean Boivin, PhD, Managing Director is Head of Economic and Markets Research at the Blackrock Investment Institute, a global platform which leverages ...
Philip Green
Managing Director, Head of Global Tactical Asset Allocation
Phil Green, Managing Director, is head of the Global Tactical Asset Allocation team within BlackRock’s Multi-Asset Strategies group. Mr. Green's service with ...