A new study by the congressional Joint Economic Committee concluded yesterday that the U.S. is "entering a new era" of slower long-term economic growth, but said unemployment would decline sharply because there will be proportionally fewer persons in the work force.
The report, compiled by the panel's staff, forecast that the shift would slow the economy's "potential" growth rate - the optimum needed to keep pace over the longer run - to 3 per cent a year by the mid-1980s, from about a 4 per cent pace today.
However, it said, because of the declining birth rate, the number of jobs in the economy would far outstrip the increase in available workers, and the present high unemployment gradually would give way to a shortage of labor.
It said the major remaining pockets of unemployment would be among very low-skilled workers. And some college graduates may still have to take lower-status jobs.
The 125-page documents was based on a series of hearings the panel held in late 1976, and on 41 research papers prepared by private economists. The sessions were held to commemorate the thirtieth anniversary of the 1946 Employment Act, which created the committee.
Rep. Richard Boiling, (D-Mo.), the panel's chairman, said the transition to slower growth would have profound implications for the economy, altering everything from investment patterns to technical progress and use of resources.
Among the possible social changes the report predicted might result from this slowdown were reduced migration between the North and the sunbelt states, more flexible work schedules, increased automation, and a move away from the materialism of the 1970s.
At the same time, it contended, the less-robust growth could spur greater individual prosperity and a better quality of life - in part because the proportionally smaller population will make fewer demands on existing resources for costly items such as energy and pollution-abatement.
The report also made these predictions:
Barring a runaway investment boom, there should be no lingering shortage of investment funds in the next two decades, as some conservative analysts have feared. Instead, the document insisted, the high rates of investment economicts say will be needed "will be within reach."
Already-known sources of mineral raw materials will be adequate to satisfy worldwide demand, at least for the next 10 years - making it highly improbable that the world will be hit by chronic shortages, as some forecasters have suggested.
The productivity of American workers, which has slowed substantially in the past several years, will begin speeding up again, providing a major step forward toward increasing prosperity and slowing the rate of inflation over the longer-run.
Despite increasing dependence on foreign suppliers, the U.S. still is in a stronger position than virtually any other industrial nation with regard to raw materials, including oil. The report said it was unlikely that cartels would develop for other materials besides oil.