The Age of Stagnation: Why Economic Growth No Longer Measures Progress

By Yuji Kato Jul. 22, 2025

For two centuries, growth has been the secular religion of modern civilization. Every policy, every budget, every speech assumes that rising GDP is synonymous with rising well-being. But the world’s richest economies have entered a new paradox: growth continues, yet progress has stalled.

According to the World Bank Global Development Indicators (2024), global GDP per capita grew 2.3 percent last year. Yet median real wages in advanced economies have been stagnant for over a decade, social mobility is declining, and trust in institutions is collapsing. What grows, it seems, is not prosperity—but its distance.

We are living through what economists now call The Age of Stagnation: a period where growth survives statistically but dies substantively.

Growth Without Gain

The disconnect between GDP and lived experience is no longer anecdotal—it is structural. In the United States, GDP has risen 72 percent since 1990, but median household income, adjusted for inflation, has increased by only 17 percent. In the European Union, productivity has grown faster than wages since 2005.

The OECD Economic Quality Index (2024) found that for every 1 percent increase in GDP in high-income countries, the bottom 50 percent of earners captured less than 0.12 percent of that growth. Meanwhile, corporate profits reached record highs.

Growth persists, but distribution has decoupled from it. The rising tide still lifts boats—just not the ones without anchors.

The End of Innovation as Progress

For much of history, innovation created new frontiers: electricity, antibiotics, the internet. Today’s economy, dominated by platform monopolies and financial engineering, produces novelty without transformation.

The MIT Innovation Productivity Review (2024) shows that the “innovation multiplier”—the ratio between technological advancement and GDP growth—has fallen by 45 percent since 1980. Much of what passes for innovation now revolves around digital optimization: better ads, faster logistics, algorithmic repetition.

We are innovating ourselves into triviality—smarter devices, duller societies.

The Debt of Growth

To maintain the illusion of expansion, nations have turned to debt. Global borrowing reached US$315 trillion in 2024, equal to 336 percent of world GDP (Institute of International Finance, 2024). Governments subsidize consumption to mask wage stagnation, corporations leverage buybacks to inflate valuations, and households rely on credit to sustain middle-class lifestyles.

Debt has become the scaffolding of stagnation—holding up a structure that no longer builds itself.

The cost is temporal: we are borrowing from the future to preserve the past.

Demographics and the Growth Ceiling

Behind every slowdown lies a biological truth. Populations are aging, and labor forces are shrinking. By 2050, one in six people globally will be over 65. Japan, South Korea, and much of Europe already face negative population growth.

The UN Population Division (2024) estimates that declining fertility could shave 1.5 percentage points annually from global GDP growth by mid-century. Fewer workers mean fewer consumers and less innovation—but higher dependency ratios.

The economic engine that once ran on youth is running on fumes.

Environmental Limits and the False Promise of Decoupling

Every additional percentage point of growth requires resource input. Despite promises of “green growth,” absolute decoupling between GDP and ecological impact remains largely theoretical. The Global Footprint Network (2024) reports that humanity consumes 1.7 Earths’ worth of resources annually.

As the planet heats, growth becomes self-defeating. Climate adaptation costs, disaster recovery, and energy transitions now consume an increasing share of GDP. The world is producing more to repair the consequences of its production.

Growth has become circular—expansion as maintenance.

The Cultural Addiction to Expansion

The problem is not only material but psychological. Growth has become civilization’s organizing metaphor: success equals increase. When economies plateau, societies panic. Politicians lose elections, investors lose faith, and citizens lose identity.

Yet endless growth in a finite system is not progress—it is pathology. The London School of Economics Behavioral Policy Group (2023) calls this the “expansion bias”: a collective inability to imagine well-being without accumulation.

Without growth, our metrics go silent. We have built an entire moral vocabulary around the graph that always points up.

The Financialization of Everything

The illusion of prosperity persists because we’ve replaced industrial production with financial valuation. In 1970, 15 percent of corporate profits in the United States came from finance; today, it exceeds 40 percent (Federal Reserve Historical Accounts, 2024).

Markets thrive even when factories don’t. Asset bubbles substitute for productivity. Companies grow through mergers rather than innovation. The economy no longer manufactures goods—it manufactures expectations.

In this system, wealth is not earned; it is priced.

The Post-Growth Horizon

A small but growing number of economists argue that the problem is not stagnation, but measurement. Progress must shift from quantity to quality—from GDP to GNH (Gross National Happiness), from production to purpose.

Bhutan’s happiness index, New Zealand’s Wellbeing Budget, and the European Union’s Beyond Growth Conference (2024) all reflect a reorientation: redefining success through sustainability, equality, and health.

The European Commission Policy Foresight Unit (2024) found that nations prioritizing social well-being metrics over GDP saw higher life satisfaction and lower inequality even with slower economic expansion.

Post-growth is not anti-progress; it is progress that grows wiser.

Redefining Prosperity

To escape the age of stagnation, we must abandon the equation of more with better. Prosperity must mean sufficiency, not saturation; stability, not speculation. A steady-state economy does not imply paralysis but maturity—the moment when societies learn to thrive within balance.

The challenge ahead is philosophical, not technical. Humanity must decide whether to remain adolescents chasing endless expansion, or adults learning to sustain what already exists.

Because a civilization that cannot grow differently will eventually not grow at all.

Works Cited

“Global Development Indicators 2024.” World Bank, 2024, www.worldbank.org.

 “Economic Quality Index 2024.” Organisation for Economic Co-operation and Development (OECD), 2024, www.oecd.org.

 “Innovation Productivity Review 2024.” Massachusetts Institute of Technology (MIT), 2024, www.mit.edu.

 “Global Debt Monitor 2024.” Institute of International Finance (IIF), 2024, www.iif.com.

 “World Population Prospects 2024.” United Nations Department of Economic and Social Affairs, 2024, www.un.org.

 “Global Footprint Report 2024.” Global Footprint Network, 2024, www.footprintnetwork.org.

 “Behavioral Policy Report 2023.” London School of Economics (LSE), 2023, www.lse.ac.uk.

 “Financial Accounts of the United States 2024.” Federal Reserve Board of Governors, 2024, www.federalreserve.gov.

 “Beyond Growth Conference Summary 2024.” European Commission Policy Foresight Unit, 2024, www.ec.europa.eu.

 “Wellbeing Budget Framework 2024.” New Zealand Treasury, 2024, www.treasury.govt.nz.