Recent U.S. Economic Performance and Prospects for Future Growth

The purpose of this paper is twofold. The first aim of the paper is to organize historical growth accounts in a new way that highlights the role of educational intensity in U.S. economic growth. Previously, the importance of education in economic growth appeared as improvements of labor quality in the sources of growth. Additional investment in human capital appeared in expanded economic accounts that incorporate human capital, such as Fraumeni, Christian, and Samuels, (2017). The second aim of this paper is to incorporate educational intensity into a medium-term projection for U.S. economic growth. We base this projection on the following assumptions: (i) a projection of the population and employment-population ratios, (ii) a projection of industry TFP growth that accounts for educational intensity, and (iii) a projection of capital quality growth. This also includes a projection of labor quality growth, which continues to be low in comparison to our historical estimates.