Americans feel the economy is working against them. How we can speed up economic growth.
We all want a future where paychecks go further in allowing people to buy the things they need and want, where homeownership can be more than just the American dream but an American reality, where quality, affordable child care is available for working families, and where Americans – and our American economy – are not saddled with unsustainable debt.
Unfortunately, in many cases, that is not the reality today, and many Americans do not feel like this economy is working for them. To create the future we want and the next generation deserves, we need to get back to growth.
While economic growth may feel like a static number on a chart, it is far more than that. It is a snapshot into the lives of everyday people, the value of their efforts, their ability to provide for themselves and their families, the belief that their children’s lives will be better than their own. And, at the very time when we need faster-sustained growth to create better opportunities for Americans, we face a future where growth is trending dramatically slower.
The history of economic growth in America
From 1950 to 2010, America’s economy grew by an average of 3.4% per year. Since then, growth has averaged just 2.2% per year, and the nonpartisan Congressional Budget Office projects that growth will slow to an average of just 1.8% per year over the next decade. But it doesn’t have to be that way. And a percentage point or 2 makes a big difference.
When our economy is growing at 3%, someone who is born today will see their living standard double by the time they are in their early 20s. It’s what we all want for our children – that they’ll be better off and have more opportunities than the generation before.
Alternatively, at 2% growth, the living standard doesn’t double until someone is in their mid-30s. That additional point of growth speeds up economic opportunity and advancement in people’s lives by more than a decade.
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Faster economic growth lifts wages, giving Americans more freedom to buy the things they need and want. It also means an economy with more choices and generally lower prices.
Moreover, even an extra half-point of growth over a decade is worth more than $1 trillion in deficit reduction, something our country desperately needs with our national debt on pace to exceed $50 trillion within a decade.
The challenge of creating and sustaining faster economic growth
So, with all we have to gain – or lose – why isn’t faster economic growth a national priority?
For one, it’s harder for the United States to achieve 3% growth now than it was in the decades after World War II, when rapid industrialization, baby boomer-driven population growth and the widespread entrance of women into the workforce created significant economic momentum. When you have those kinds of tailwinds, even the headwinds of bad public policy won’t significantly slow growth.
Today, of course, the United States has a mature economy – increasingly service driven – and demographics are not on our side.
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The challenge – and the opportunity – is that today our public policy environment is more critical than ever in determining whether Americans have more opportunities or fewer. That’s why we need our elected officials to look beyond the next election and set targeted priorities for our collective future.
Economic growth is not a red issue or a blue issue. It’s a red, white, and blue imperative.
Focus on the need for a better workforce
First, America needs a larger and more skilled workforce.
That means securing our border and reforming the immigration system to allow more people to legally come into this country to work. It means providing affordable and accessible child care for working parents. And it means ensuring people have the opportunity to learn the skills necessary to keep up in a growing and changing economy.
Second, we must support American innovation and allow it to be shared with the world.
Artificial intelligence has vast potential to jump-start innovation, creating new solutions across health care, education, climate and more while significantly boosting efficiency. Strong intellectual property protections helped us build the most sophisticated knowledge economy in the world, and going forward they will be more important than ever: 95% of the world’s consumers live beyond our borders, and the ability to trade and sell them goods – and increasingly services, including digital services – is key to supporting greater economic growth at home.
Finally, we need to provide Americans – and American businesses – certainty.
A good place to start is our nation’s tax code, with what could be the largest automatic tax increase in American history looming at the end of 2025 unless Congress acts.
Our ability to substantially improve our lives depends on how quickly the overall economy is growing. We urge our elected officials to prioritize policies aimed at achieving a minimum of 3% annual economic growth. Continued growth and prosperity are essential for our country's success, fostering greater opportunities for all Americans.
Suzanne P. Clark is president and chief executive officer of the U.S. Chamber of Commerce.