Greenspan recently sat down with Bloomberg for a brief five minute interview, and in showing us how brilliant he really is, left us with five hours worth of additional research. Here are five takeaways regarding the current state of US economy:1. A necessary condition for the type of GDP growth required to outgrow the entitlements funding gap is a per-hour output growth rate of two percent.
2. Current output per hour growth rate is roughly 0.5%.
3. To get an estimate of what GDP will look like, he multiplies the workforce population with the output growth rate and few other variables.
4. There's a 9% average annual increase in entitlements that's technically eating away at the domestic savings of the economy; which in turn is a critical requirement in getting capital investment growing, which is the key element in productivity growth.
5. No Democrat or Republican will ever touch the subject of entitlements - if they do, they lose automatically.
To add: The CBO projects a substantial increase in the budget deficit over the next ten years, which will reach 5% of GDP in 2019.
