Complaints about sub-par economic growth have been unceasing since the global financial crisis, often pegged as criticism of governmental policy mistakes. But Vanguard sees reason to be cheerful about the caesura in the pre-crisis 3% growth to today's 2% trend.
"The [pre-crisis] explosive growth in debt-financed consumer spending was a risky, if temporarily effective, economic steroid…Without the debt-financed spike in consumer spending from 1980 to 2007, GDP growth would have been 0.76 percentage point lower. If we adjust that figure for the slower population growth that we…can expect in the decades ahead, GDP growth would have been about 2% per year. The new normal is mostly the old normal, minus the surge in performance-enhancing debt."
That upbeat point of view contrasts with a predominantly bleak perspective in today's news and views, starting with the IMF's gloomy global forecast:
- Jim Sloan: The 5 best days to have bought stocks in the past 100 years, and lessons therefrom.
- Gary Gordon explains why today's U.S. stock market does not present such an opportunity.
- And Dana Blankenhorn says now is a most auspicious time to raise cash.
- Venture capitalist Peter Thiel says everything's overvalued: stocks, government bonds, housing, etc.
- Only 11% of 40- and 50-year-olds are on track toward retirement sufficiency.
- Larry Swedroe suggests partial annuitization (via immediate annuities) as a potential solution for those who fear they will have insufficient retirement income.
- Retirement researcher Wade Pfau ways in on the investments vs. insurance debate as well, and also recommends partial annuitization.
- The ultimate impact of the new fiduciary rule will only be worked out as various industry players weigh in - via lawsuits and otherwise.