The view is often promoted that low GDP growth over the past decade is caused by low interest rates and balance sheet expansion (QE) by central banks. That is putting the cart before the horse. Central banks have tried to stimulate their economies, with massive QE and low interest rates, because of low GDP growth. Not the other way around.
The real cause of low GDP growth is low job growth, as the chart below illustrates.
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Offshoring jobs means offshoring growth.
The last time that the US had employment growth above 5.0% is 1984 which also the last time that we saw real GDP growth at 7.5%. Since then, job growth has progressively weakened — and GDP with it.
In the last decade, employment growth peaked at 2.27% and GDP at 3.98% in Q1 of 2015.
We now expect job growth to fall to -20% in April, four times the -5% trough in 2009, and a sharp GDP contraction.
How long the recession/depression will continue is uncertain. But, in the long-term, it is unlikely that the US can achieve +5% real GDP growth unless employment growth recovers close to +3.0%.