iShares ETFs

The U.S. market has dug itself out of the financial depression of 2008, but stocks and exchange traded funds will likely continue to experience slower growth in the coming years as a number of factors still weigh on an economic expansion, according to iShares analysts.

“Going forward, economic growth is unlikely to accelerate in a meaningful way,” Russ Koesterich, Managing Director, iShares Chief Investment Strategist, wrote in a research note. “The consumer deleveraging has played a significant role, but other factors are also contributing: a stubbornly high underemployment rate, an aging workforce, an elevated and growing national debt and lackluster productivity.” [Broad Stock ETFs Fall Below Long-Term Trendlines]

Koesterich predicts the U.S. economy will expand 2% or a bit less for the next few years.

Americans have too much debt relative to their income and wealth. The current ratio of household net worth to debt is about 4.8 to 1, compared to the long-term average of 7 to 1. This poses a significant problem considering that consumption accounts for 70% of U.S. GDP.

Weak real income growth of between +1% and -1% year-over-year since 2009 as a result of the poor recovery in the U.S. labor market has contributed to a slower economic expansion. Even if the jobs market recovers, the slowing wage growth has been a standing trend before the financial crisis.