According to recently revised GDP growth data, the U.S. economy only grew at an annual rate of 1.3% in the first quarter of 2024, down from an earlier estimate of 1.6%. Neither number is particularly good compared to 1980s and ‘90s growth rates that regularly exceeded 4%. To improve growth and expand opportunity we must embrace a mindset of abundance rather than stagnation, accept more risk, and be more optimistic about the future.
For most Americans, the American Dream is about freedom and opportunity. In a recent survey from the Archbridge Institute, 82% of respondents considered freedom of choice in how to live essential to their view of the American Dream, more than retiring comfortably (68%), owning a home (50%), having a successful career (42%), or becoming wealthy (14%).
Archbridge’s survey also asked about opportunity, specifically how people viewed their opportunities relative to their parents. Overall, 48% of respondents said they think they have more opportunities than their parents, while only 19% said they have fewer opportunities. The rest think they have about the same opportunities.
While 48% is not terrible, it should be much higher. Ideally, everyone would think they have more opportunities than their parents. The overall number also hides more worrying differences across age groups. In the 60-plus age group, 63% said they have more opportunities than their parents, but in the 18-29 group, only 37% feel the same way.
Perhaps we should not be surprised. Economic growth was strong in the 1960s and early ‘70s when many people over 60 were growing up (though the late 1970s had its own economic problems). It was also strong from the mid-1980s through the ‘90s when most people in their ‘60s were building their careers. Age also likely plays a part since mature people with more life experience are better able to put things in perspective.
For young people today, the story is different. There is evidence that people who come of age during periods of slow economic growth, such as the last 20 years, exhibit more zero-sum thinking. This likely influences how today’s young people feel about their opportunities relative to previous generations.
This feeling is not unfounded. When the economy is stagnant, the only way for one person to get more is for another to get less. This was largely the way the world worked for thousands of years. Only since the industrial revolution has there been a steady increase in opportunity and living standards across the board.
The relationship between opportunity and economic growth is important. For opportunities to matter, people must be free to pursue them. Places with more freedom enable people to take advantage of more opportunities and these same places—whether countries, states, or cities—also have stronger economic growth.
Recent state-level GDP growth data reveal where the opportunities are in America. In 2023, the Southwest (5.1%) and Southeast (3.1%) regions of the country had the strongest economic growth while the Great Lakes (1.2%) and Mideast (1.3%) had the weakest (see map below). People are also moving to the Southeast and the Southwest regions. Economic growth and population growth reinforce each other: People generate economic growth, and growing economies create new opportunities that attract more people.
Despite the obvious benefits of economic growth, some are turning against it. They equate growth with buying stuff—clothes, jewelry, cars, electronics—and wasting resources. They argue we need to think differently about how we spend our time and money. It is true that reckless consumption is not the path to prosperity, but economic growth is more than consumption. As Nobel-prize winning economist Edmund Phelps discusses in his book, Mass Flourishing, the primary benefits of modern capitalism and the economic growth it generates are nonmaterial: They are “the stir of challenges, the satisfaction of testing and exploring, and the thrill of success”.
Unleashing human creativity leads to economic growth because humans have an inherent desire to solve problems. Often this problem solving leads to new things, including new businesses, goods, and services. The modern economy, with its well-defined property rights, liquid financial markets, and widespread availability of information, gives more people than ever the opportunity to productively use their talents and creativity. The technological innovation behind economic growth has eliminated many mundane jobs that required humans to function as little more than machines, doing the same dull tasks all day, every day. More economic growth is a sign we are increasing the opportunities people have to use their brain as well as their hands.
Accepting stagnation does not just mean less stuff. It means less rewarding work and fewer opportunities for individual flourishing. It means less novelty and fewer achievements. It means ignoring what is possible and just accepting what is.
Alternatively, an abundance mindset means not settling. It is recognizing that we have only scratched the surface of our potential. It means embracing challenges with the belief that we can overcome them. It is not pursuing growth for growth’s sake but realizing that economic growth is an inevitable outcome of free people using their talents and abilities to solve problems.
Embracing stagnation will crush the American Dream, while pursuing abundance will allow it to flourish. What will it be America?