Tell me how we are going to get out of the "Black Hole" of growth

“It is easy to dodge our responsibilities, but we cannot dodge the consequences of
dodging our responsibilities.” - Josiah Charles

There is growing optimism in the markets as stocks continue to march higher, yet I am nervous about this rally. Perhaps this is a good thing because then I will not be driven by the euphoria of a bubble. My nervousness is associated with the "Black Hole"in the US economy. Simply put, there is a lot of GDP that has to come from other places to get us out of the recession hole. We could out of the recession bu that is different than a strong recovery. The strong recovery is needed to make up for the decline in potential GDP, the output gap.

Here is the problem. For every 1% increase in savings, there is a decline in consumption of $109 billion. If we increase savings by 5%, we will be in the hole to the tune of $545 billion dollars in consumption every year. The second hole is residential and commercial construction. This represents over 2.5% of GDP. If this does not grow, we will have further declines in GDP that have to be made up from some other source. Some estimate that this will be a drag of $200 billion. So now we are at $745 billion that has to be made up somewhere else.

We could get a gain in exports or a decline in imports from the decline in the dollar, but the elasticities for each seem to suggest that trade will not make up the shortfall. Inventory levels have been falling but the inventory to sales levels are still by many measures. There are just a limited number of places where gains can offset the Black Hole.