|President Barack Obama talks with Rachel Robinson before the “42” movie screening with Robinson family members and cast and crew in the Family Theater at the White House, April 2, 2013.
Dr Peter Morici:
Friday, forecasters expect the US Labor Department will report the economy added
193,000 jobs in March. This is in line with the pace of recent months but hardly
enough to lower unemployment down to acceptable levels.
In the fourth quarter, GDP was up only 0.6%, slowed by a drop in
inventory build and smaller Pentagon purchases. Those factors are not likely to
repeat, and first quarter growth should register in the range of 2.5%.
Consumer spending is picking up as rising home and stock prices restore
household wealth. However, the pace of the recovery and jobs growth remains
disappointing by historical standards and the need to create millions of new
jobs to lower unemployment.
Since turning the corner in mid 2009, GDP growth has averaged 2.1% and
unemployment has fallen from 10.0% to 7.7%. In contrast, high oil
prices and double digit interest rates pushed unemployment to 10.8%
during Ronald Reagan's first term; then GDP growth averaged 5.2% for the
next three and half years, and unemployment fell to 7.3%.
The economy must add more than 360 thousand jobs each month for three years to
lower unemployment to 6%. That would require growth in the range of 4 to
5% and is not likely with current policies.
Factors contributing to the slow pace of recovery include the huge trade
deficits on oil and manufactured products from China and elsewhere in Asia-these
drain demand for U.S. goods and services. Absent U.S. policies to confront Asian
governments about their purposefully undervalued currencies, and to develop more
oil offshore and in Alaska, the trade deficit will continue to tax growth.
The recent surge in natural gas production, and accompanying lower prices, is
substantially improving the international competitiveness of industries like
petrochemicals, fertilizers, plastics, and primary metals-as well as consuming
industries like industrial machinery and building materials. However, the
Department of Energy is considering proposals to boost exports of liquefied gas.
That would reduce the trade deficit and boost growth much less, and create many
fewer jobs, than keeping the gas in the United States for use by
Dodd-Frank regulations make mortgages, refinancing, and home improvement loans
much more difficult to obtain. The recovery in housing construction, though
welcomed, remains lackluster as compared to past recoveries. In turn, those slow
expansion in building materials, major appliances, furniture and other durable
The high cost and slow pace of regulatory reviews are a constant complaint among
businesses and dampen investment spending. Government needs to subject policies
to protect the environment and other regulatory goals to the same efficacy
standards the market applies to commercial technologies-regulatory assessments
and enforcement are needed but those must be delivered cost effectively and
quickly to add genuine value.
Many businesses with overseas opportunities remain tentative about adding
capacity and hiring workers in the United States. Instead, they look to Asia
where government policies are more accommodating and prospects for growth remain
Without better trade, energy and regulatory policies, that is simply not going
Professor, Robert H. Smith School of Business, University of Maryland,
College Park, MD 20742-1815,
703 549 4338 Phone
703 618 4338 Cell Phone
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