Explaining the Great Recession and Anemic Job Recovery: The Role of Faltering U.S. International...
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December 5, 2011 Explaining the Great Recession and Anemic Job Recovery: The Role of Faltering U.S. International Competitiveness Dr. Robert D. Atkinson President Information Technology and Innovation Foundation
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The Great Recession officially ended more than two years ago but the recovery is barely perceptible and anxious policymakers are running out of options. Washington cannot seem to agree on what caused the Recession in the first place or how to create robust job growth. One camp argues for revving up consumer demand through fiscal and monetary policy. The other says the financial system got out of control and we just have to wait for our books to get back into balance. Remarkably, neither of the dominant schools of thought focuses on the principal cause of the Great Recession and our current anemic jobs recovery- the collapse of U.S. manufacturing and innovation-based competitiveness over the last generation. Faulty diagnosis leads to ineffective cures. It's time for a new approach grounded in a new diagnosis.
Transcript of Explaining the Great Recession and Anemic Job Recovery: The Role of Faltering U.S. International...
December 5, 2011
Explaining the Great Recession and Anemic Job Recovery: The Role of Faltering U.S. International Competitiveness
Dr. Robert D. Atkinson President Information Technology and Innovation Foundation
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How do we Explain These Symptoms?
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How do we Explain These Symptoms?
Source: University of Michigan Surveys of Consumer
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How do we Explain These Symptoms?
The Seven Diagnoses of U.S. Economic Travails
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The Seven Diagnoses of U.S. Economic Travails
1) More Stimulus is Needed: This is a Severe Keynesian Contraction
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2) Face Facts: Financial Crises Just Take a Long Time to Recover From
The Seven Diagnoses of U.S. Economic Travails
3) Why Invest With all This Regulatory Uncertainty?
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The Seven Diagnoses of U.S. Economic Travails
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4) There Are Lots of Jobs, But Few Workers With the Skills.
The Seven Diagnoses of U.S. Economic Travails
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The Seven Diagnoses of U.S. Economic Travails
5) The Gas Tank of Innovation is Empty
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6) The Gas Tank of Innovation is Full, and the Robots Are Taking Our Jobs
The Seven Diagnoses of U.S. Economic Travails
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The Seven Diagnoses of U.S. Economic Travails
7) U.S. Competitiveness Failure
Loss of Non-Traded Sector Output Is Quickly Made Up
Loss of Traded Sector Output Is Not
“It’s the Traded Sector Stupid”
If the U.S. loses traded sector output from imported sector output, demand is met but not in the U.S. Laid-off workers don’t get easily reemployed. This can be a stiff wind against recovery and growth. For every step forward, there’s one back.
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Manufacturing Jobs and Overall Job Growth Are Related
19% 20%
4.50%
-7%
-1%
-32%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
1980s 1990s 2000-2008
Overall Job Growth
Manufacturing Jobs Decline
U.S. Manufacturing: The Agriculture Story?
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U.S. Manufacturing: Or the “Rust Nation” Story?
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0
5000
10000
15000
20000
25000
U.S. Manufacturing Jobs Fell Precipitously in the Last Decade
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0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
56 %
61 %
But Not Largely Because of Productivity
Share of Manufacturing Jobs Lost
-35
-30
-25
-20
-15
-10
-5
0
Great Depression
Share of Manufacturing Jobs Lost
The 2000’s
-35
-30
-25
-20
-15
-10
-5
0
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
manuf job growthas share of popgrowth -97-2010
Correlation between change in manufacturing jobs from 87 to 2005 and total change in employment from 2005 to 2010 was 0.57.
U.S. Manufacturing Job Growth is Worst in OECD Sample
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Sum of Annual Real GDP Changes
0
5
10
15
20
25
30
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1980-89 1990-1999 2000-2009
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-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
80's 90's 2000's
Manufacturing Contribution to Sum of Annual Real GDP Change
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0
5
10
15
20
25
30
35
1980-89 1990-99 2000-09
Sum of Annual Real GDP Changes Had Manufacturing Shares Not Declined
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2.2 million
Additional Manufacturing Jobs Had Manufacturing Grown at GDP Rate This Decade
Robert Atkinson [email protected]
Facebook: facebook.com/innovationpolicy
Blog: www.innovationpolicy.org
YouTube: www.youtube.com/user/techpolicy
Website: www.itif.org
Twitter: @robatkinsonitif
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Thank You
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