The voices of pessimistic secular stagnationists have been growing louder and louder. Robert Gordon's recent book has been the poster boy recently, emphasizing technological stagnation, productivity slowdowns, and a lack of likely new products of any real value to humans. He and Tyler Cowen focus on the relationship between IT and the rest of the economy, seeing a slowdown in productivity improvements in the economy coming from this important sector. Lawrence Summers emphasizes demand side stagnation, but sees his view as complementary to the supply-side technological pessimism coming from Gordon and others.
A particular reason from the supply-side that these forecasts of increasing stagnation may prove to be oveblown comes from a sector that none of these doomsayers ever mention, but which remains fundamental to the world economy: energy. In particular, both solar and wind energy have been experiencing dramatic declines in costs, which many are projecting will continue in the foreseeable future. For one among several sources on solar energy see Ramen Naam, from August, 2015. Obviously one must take such projections with caution, but this post projects solar costs to be about two thirds of current ones in a decade and about half of current ones in two decades. This is dramatic. On wind a report from the US Department of Energy, also in August 2015, makes no projections, but reports costs in the low-cost interior of the US falling from $70/MWh in 2009 to $23/MWh in 2014. Anything like this continuing would be important. Their prices are now competitive with conventional sources.
Those who see these numbers, or ones like them, but dismiss them, emphasize what a small percentage of current energy comes from these sources (so far mostly useful for electricity production), although in certain locations such as Denmark have more substantial portions relying on them. But, this is the point. If indeed we see dramatic further reductions in costs that put theses sources far lower in cost than current ones, we may well see massive investments in shifting to them that could substantially transform the energy sector of the world economy and the world economy itself more broadly, including allowing for major productivity increases and an acceleration of growth in the real economy, irrespective of whatever is going on in the IT sector or whether wonderful new products that make the indoor toilet look boring and unimportant will be discovered. Producing the same old stuff at much lower real costs can provide a powerful growth stimulus, not to mention that such sources would help substantially in dealing with the climate change problem.
A more sci fi issue is the possibility of getting commercially viable nuclear fusion breakthrough. I am less optimistic on this front, where there have been many false announcements. However, for better or worse, there seems to be a lot of noise on this front about possible breakthroughs, coming from such sources as the International Atomic Energy Agency (IAEA). Thus, the possibility of some major breakthrough in this area could happen, and this could also be a major game changer as well.