"If Economic Growth Slows Over the Coming Decades, Will Stock Market Returns Also Slow?"

Leading Economists Argue that Stock Market Returns Will Slow if GDP Growth Slows. As reported in the New York Times today, "In a paper to be presented on Thursday at the Brookings Institution, three economists who are longtime critics of Mr. Bush argue that stock returns are likely to be about 4.5 percent if economic growth slows as much as the administration predicts. 'We find it arithmetically very difficult to construct scenarios in which asset returns are at their historic average values and real G.D.P. growth is markedly slowed,' wrote the economists, Paul Krugman of Princeton University, whose Op-Ed columns in The New York Times have long been sharply critical of Mr. Bush's plan; J. Bradford DeLong of the University of California, Berkeley; and Dean Baker of the Center for Economic Policy and Research, a liberal research organization in Washington." [New York Times, 3/31/05]