The economics world is obsessed with “secular stagnation” right now.
In short, this idea — which was re-surfaced by Larry Summers in 2013 — says that there isn’t enough demand in the US and world economies to create economic growth above 2%.
Over the last 40 or so years, the US often enjoyed growth rates far in excess of that number.
But Warren Buffett thinks concerns about what this 2% growth path means for the future of the US economy are far overplayed. In fact, he thinks the idea that this is bad news at all is just wrong.
In his 2015 letter to shareholders, Buffett writes, “Some commentators bemoan our current 2% per year growth in real GDP – and, yes, we would all like to see a higher rate. But let’s do some simple math using the much-lamented 2% figure. That rate, we will see, delivers astounding gains.”
Here’s Buffett working out the whole problem (TL;DR, it’s gonna be great either way. Also, all emphasis ours):
Of course, if you look at Buffett’s portfolio of holdings, he is levered very, very long to the US economy. Said another way: he himself is betting heavily that things will continue to get better in the US.
But when thinking about how “bad” things are for an economy that is growing around 2% per year — as the US economy is right now — Buffett’s argument is that, well, it’s not bad at all.
This article originally appeared on BusinessInsider.com
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