Will we restore economic growth?

McKinsey has released a thoughtful assessment of what the future post pandemic global economy might look like. The study projects the potential for strong, sustained economy growth, driven by restored productivity growth. But critical to this dynamic is strong growth in aggregate demand, something that has been lacking for nearly two decades. The global economy has suffered from a glut of financial capital and a scarcity of attractive real economy investments. The result is historically low interest rates--even junk bonds, once call "high-yield"--offer yields under 4%. The pandemic has driven some remarkable innovation and points to the possibility of vastly improved productivity--and thus growth--going forward. But realizing that potential relies on sustained investments in innovative new products and processes--but such investment only emerge when investors/businesses see strong future demand. So McKinsey smartly links public policy and support for growing demand with the future pattern of productivity growth. See its study.