But perhaps a larger risk is that changes in public policies may, in the pursuit of stability, hold down the growth of the U.S. economy over this period. Simple textbook models tell us that a nation's output is the product of the number of hours worked and the output produced per hour.
In thinking about the medium-term prospects for the economy, I find it useful to consider these two factors separately. Output per hour, or productivity, is the secret sauce to U.S. economic growth and to rising living standards, but I fear that the recipe may have lost some key ingredients.