5 Factors that Could Lead to a Slow-Growth U.S. Economy

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1) Housing sector doldrums. The U.S. housing sector's overbuild during the leveraging bubble and the subsequent bust means it will take at least another year to work off excess inventories in single-family homes, condos, co-ops, and the like.

What's more, slumping prices will cause some families who would typically "trade-up" to stay put -- eliminating additional sector activity. As a result, housing invariably will not be as strong a U.S. GDP growth engine as it historically has been during previous expansions.

2) Demographics. The U.S.' low birth rate and immigration's inability to keep population growth trending at a high level will have implications for many commercial sector, and obviously for public policy.

The U.S. population is aging, and it's largest generation, the post-World War II Baby Boom generation, is starting to retire. That implies even less consumer spending, as adults typically decrease spending in their retirement years. What's more, the low birth rate will place more pressure on existing citizens to fund Social Security and Medicare, and absent a large pay-out adjustment, payroll taxes will have to increase.

3) Export traffic jam. Here, the news is mixed regarding impact on U.S. GDP. In general, U.S. multinational corporations are well-positioned, from  product quality, market position, and distribution network standpoints, for the global economic expansion.

In other words, U.S. corporations are lean, productive, and ready for battle. The problem is, however, so are are many other foreign-based competitors. Moreover, dozens of formidable emerging market nations have export-dominant economies: they have to export to grow. Hence, the current  global expansion will probably likely feature a surplus of goods (at least initially), and intense competition. That's likely to keep U.S. export revenue below what it would be without those surplus goods, limiting the tailwind from exports to U.S. GDP.

4) U.S. budget deficit reduction. Spending for the bank bailout, related financial system measures, and the fiscal stimulus package will have to paid for. In addition, health care reform will limit entitlement spending growth in Medicare and Medicaid, but additional spending cuts and tax increases will be needed -- removing even more resources will be removed from the private sector. Net result? Historically, tax increases have constrained U.S. GDP growth, at least in the beginning of their implementation.

5 Frugal consumers. This will likely be the most important factor in the "new normal," slow-growth U.S. economy.

True, since the end of World War II, or so it seems, the words "frugal" and "consumer" have not gone together in the United States.