Alan Greenspan told Bloomberg Wednesday that productivity expansion in the United States had slowed “significantly” and that the economy would soon suffer.
“Productivity in recent peak knowledge is 1% consistent with the year. This is a very significant minimization of the past consistent with periods and is beginning to look like such that it is recommended that the interim period consistent with the period before us be consistent with a slow period of economic growth,” said the former Fed chairman.
Greenspan said an ageing population leads to an increase in social security benefits, slowing down the savings rate, reducing capital investment and slowing productivity.
“If gross domestic savings decrease, gross domestic investment, which is the key to economic growth, will also decrease because they generate all the economic activity we get in capital markets,” Greenspan said. “So I’m very worried about that and I don’t know how we’re going to get out very fast. “
Greenspan called an ageing population a “fundamental challenge” of the economy. He said it was a challenge that wouldn’t “disappear” like the coronavirus would.