3. GDP growth below historical levels
GDP growth for the G7 countries has slowed to an average pace of 1% to 2% on a trailing basis in the past five years. That compares to 2% to 4% over the prior 15 years. China and other emerging economies, with a cheap labor force and rich in commodities, have buoyed the global economy. Going forward, China's economy is expected to continue to slow from the current 9.4% pace, not a good sign for global growth prospects.
4. Consumption turning into savings
One thing the recession taught consumers and businesses is to maintain a cash cushion. Companies have shored up balance sheets, and consumers are saving more. From 2008 through 2010, the average personal savings rate was just over 5%, a level not seen since the late 1990s. More recently, that rate has fallen, reaching 3.6% in September, but disposable income declined 1.7% in the third quarter (adjusted for inflation and taxes). Business and consumers need to start spending again if the U.S. economy is to grow again.
5. Historically low levels of investment
The stash of cash on company balance sheets is proof that corporate America isn't investing. To get the growth engine going, those companies need to reinvest in current operations, acquiring other firms or buying equipment. In addition, they could return cash to shareholders through dividend payments, and investors could spend those payouts.