The big news from this Bloomberg story is captured by its title:
Stock-Market Returns May Not Meet Bush’s Social Security Hopes
But when other economists noted slower long-term growth would suggest lower stock returns, the Treas. Sec. suggested we would still have strong long-term growth:
Treasury’s Snow says high stock-market returns will be possible because gains in productivity – or output per worker – will continue to be strong, offsetting slowing population growth. GDP growth is a function of both growth in the workforce and productivity, he said in a March 23 interview. “Productivity stays strong, and productivity per capita remains high,” predicted Snow, who has a Ph.D. in economics. “And it’s productivity per capita that drives returns on assets.”
Let’s say that he’s right about productivity. Then the Soc. Sec. Trust Fund will not run out of reserves in 40 years. Something tells me that Snow is in Rove’s doghouse.