But the slower growth trend is likely to extend past the current recovery, no matter when we pull out of it. The recoveries from the past two recessions have been among the slowest on record, and suggests the underlying strength of the U.S. economy is weakening. But that’s just the beginning of why the downgrade makes sense.
There’s more: The aging of the U.S. population is likely to significantly boost healthcare costs and increase inflation. And a multi-decade long increase in the wealth gap in the U.S. has led to a vast increase in the amount of debt most Americas have. It has lowered the standard of our healthcare and education systems, and also made the U.S. more vulnerable to future financial crisis.
But, to be sure, a large part of the current downgrade is political. And those aren’t going away anytime soon either. The fracturing of our political system has led to the rise of political parties that are unwilling to compromise on our biggest challenges. It is clear that the rise of the Tea Party and the pledge of Republicans in general to never raise taxes, along with the Democrats unwillingness to cut Social Security, produced the downgrade.