Our economy continues on the longest economic expansion in American history, well prior to the recent presidential election, at a pace of around 2%, about as much that is sustainable longer term. Weather related problems may slow the pace, but the trend is well established and is likely to persist. Home construction is modestly increasing held back by the lack of skilled labor and to a degree, the availability of credit. Infrastructure and military spending have been moderate despite Trump’s political spin. City, state and pension spending is and will likely continue constrained because their budgets are mainly in deficit and because of wide spread anti-tax sentiments. Plant and equipment investment is growing faster than GDP. Business inventory accumulation remains low perhaps because of internet innovations that appear to be reshaping consumer practices.
Since employment growth is bound to diminish as the ranks of the unemployed are depleted (the current unemployment rate of 4.4% is unlikely to fall much further), consumption growth, too, is liable to slow. Once monthly payroll job increases decline significantly, as is probable by mid-2018 if not sooner, sales gains will erode and talk of recession will revive–possibly easing the political gridlock over tax reduction.
I have spent many years of my life outside the US. Living abroad reinforced the idea that what is noblest of our country is exactly its openness: Its openness to talent, to new ideas, to new ways of doing things, to new blood. We are a welcoming society. We don’t build walls, we build towers to seek new horizons and new friends. What is Ellis Island all about if it is not about Welcome? What about NASA and the Peace Corps? These are not isolationist tendencies.
My America is a place that gives immigrants and “the wretched refuse” of the world — the words on the Statue of Liberty — a chance to make this arena for their dreams and ambitions, despite all the difficulties of adjustment. My America is not the one that builds a wall to keep people out. Many of you have lived it in your own lives. America is hardly overrun with immigrants: Their percentage of population is lower than in any decade between 1860 and 1930. Post-World War II, when the population of immigrants fell to 4.7%, that was when America began to stagnate. The potential growth of any economy has, is the sum of workforce and productivity growth.
With baby boomers retiring, the rest of us and our economy need immigration more than ever. The rule of thumb is that 10,000 boomers will hit retirement age every day for years. Someone has to do their work — and someone has to replace their consumption.