Reaping What We Sow: Investment Trends and the Future

Explanations for the recent performance of the U.S. economy, such as secular stagnation (Summers, 2013, 2020), low productivity growth (Ramey, 2020), and building credit imbalances (Rogoff, 2020), tend to paint rather dire pictures of the future. They suggest either continued low growth or a financial correction or both, and argue for strong interventions in the economy now to forestall or reverse these daunting outcomes. Interestingly, these varied diagnoses for the recent behavior of the U.S. (and in some cases global) economy have in common a similar prescription: investment. Whether to raise productivity growth or over come secular stagnation, greater investment, while not viewed as a panacea by any means, is part of the vision for an improved future outlook. Investment may take the form of increased human capital, research and development, public infrastructure, or other forms of capital, but the general feature is to set aside resources today to achieve improved outcomes in the future. This paper assesses the state of investment in the U.S. today, both in the private and public sectors.