- Economic recovery in the United States is stronger than in most OECD countries, but it will remain sluggish unless new reforms are launched to boost growth, according to OECD’s latest Economic Survey of the United States.
- Organisation for Economic Co-Operation and Development
The U.S. recovery has spread across a wide array of sectors. Most banks have generally returned to health, housing prices are rising and unemployment has fallen. That said, growth could be bolstered by new reforms of taxes, education, training, immigration and working conditions – all of which could improve the economic prospects of middle-class families.
“This isn’t a business as usual recovery for the United States – the pace of growth is slow in historical perspective,” OECD Secretary-General Angel Gurría said during the Survey launch in Washington with Jason Furman, Chairman of the Council of Economic Advisors. “Steadfast action is needed to implement the reforms that will bolster the economy’s growth potential and make it more inclusive and greener. In this regard, I particularly welcome President Obama’s recent announcement of concrete measures to cut carbon emissions.”
According to the OECD Survey, the labour market is not yet back to normal. Unemployment has declined rapidly, but many discouraged workers have stopped looking for a job altogether and many part-timers would like to work longer hours. Finding a job remains challenging, especially for the large number of long-term unemployed. The report encourages close cooperation between businesses and government to tackle these challenges. A key business strategy should be to upgrade the skills of workers as this raises productivity and often leads to higher corporate profits.
The report notes downside risks to the recovery, such as renewed weakness in the housing market, financial-market turbulence and a possible weakening of productivity growth. It also suggests that the exit from unconventional monetary policy should occur at a gradual pace, as the economy approaches full employment and inflation goes back to the Fed’s 2% target.
The Survey highlights that income inequality is high in the United States. Middle-class and disadvantaged families have been struggling with a changing job market and with the high costs of education and healthcare. While this cannot be improved easily, the report praises reforms recently adopted or being considered: health care reform will help vulnerable families access high-quality care; dealing with mental health will help reduce job loss and disability; preschool education would be a good investment in children’s future and help middle-class parents; and paid maternity leave would help working women.
The OECD welcomes the US “energy renaissance” fostered by new hydraulic fracturing technologies, which has boosted the recovery and job creation while turning the country into the largest producer of natural gas in the world, helping to reduce emissions of greenhouse gases. The Survey recognises the various environmental challenges and safety issues resulting from the new energy boom, while noting that renewable energy has also seen a welcome increase. The OECD recommends introducing an adequate pricing of greenhouse gas emissions and supporting innovation in energy saving and low carbon technology.