The U.S. Recovery Debate

Source:

Economic Survey of the United States 2016

The U.S. Economy Is in Great Shape (Compared with Its Peers)

The U.S. Recovery Is Not What It Seems

CEOs Turn More Bullish About Business Investment

 

Strongest recovery in the OECD

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Actually the investment is no longer an advantage.

Facts holding back business investment:

  1. the ample availability of workers at modest wages, with firms choosing labor over capital
    (“Employment growth could slow as labor becomes more scarce,”  “At the margin, businesses might find it more efficient to increase capital expenditures”)
  2. the retrenching of the energy industry
    (“That trend might be over with crude oil prices returning to the $50 range.”)

 

Not the case: Taking account of population growth

A. 

The U.S. population is growing much faster than those of either Europe or Japan, so its economy should almost automatically grow faster as well.

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The U.S. is still ahead, but not by much. And within the euro area, Germany actually exceeded the U.S. by 5 percentage points.

B.

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The fraction of those aged 25 to 54 with a job was about 2.5 percentage points lower in 2015 than in 2007. In the U.K. and Japan, the prime-aged employment-to-population ratio already exceeds its 2007 level.

If the U.S. recovery actually hasn’t been so comparatively strong,

  • Federal Reserve’s unconventional monetary-policy measures – e.g large-scale asset purchases – have been not so much effective than other central banks.

 

2 More important Figures

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