For today let’s have less meta and more data.
The key economic and demographic tables are V.A1 ‘Principal Demographic Assumptions’, V.B1 ‘Principal Economic Assumptions’ and V.B2 ‘Additional Economic Factors’ all of which are available in the 2008 Social Security Report’s List of Tables as are the tables showing numeric outcomes in both inflation adjusted Constant dollars in VI.F7 and unadjusted Current dollars in VI.F8. In each case you get projected numbers for each of the next ten years and then for each five year interval to 2085 for each of the three models Low Cost, Intermediate Cost, and High Cost. In each case the models settle out to a steady state ‘Ultimate’ number in about 2014 and stay more or less steady through the rest of the 75 year window.
So we are faced with two different questions. First of all nobody has a crystal ball, economists are disputing what is happening this quarter, in fact there is not consensus on what happened last quarter, the idea that we can pin down Real GDP and Real Wages for any particular future year is in some respects nonsense. But what we can do is come to some sort of conclusion about where the economy is likely to go over the next ten years and what the long term potential will be. So question one is ‘How likely are we to end up in 2012 with the numbers we see?’ and two ‘What is America’s fundamental bottom line going forward?’ Or more polemically ‘Is America’s future bleaker than its past, or are the best days yet to come?’
So I would urge everyone interested in this topic to add the List of Tables to your Favorites or Bookmarks and visit the numbers early and often. As a teaser lets take some selected numbers for 2008, 2012, and 2016 from the standard Intermediate Cost alternative.
Productivity 1.9%, 1.8%, 1.7%
Real Wage Differential 1.3%, 1.2%, 1.0%
Real GDP 2.3%, 2.5%, 2.3%. Note here that they are figuring in some period of slow growth near term. If we took the series 2009, 2013, 2017 we see 2.8%, 2.5%, 2.3%
Unemployment 4.8%, 5.3%, 5.4%
This pattern has been seen in Intermediate cost for a decade, the official projection is that across the board over what can only be seen as the short term that the median outcome is a pretty sharp decline, and more importantly a permanent one, the future will never be better than 2006. No one I think would claim these outcomes are not possible, but are they really the median? As a bonus question, if they do represent a median under status quo economic policy, what could we do to boost them towards Low Cost? Over to you.