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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19

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

35

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 ratkinson@itif.org

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