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.
Explaining the Great Recession and Anemic Job Recovery: The Role of Faltering U.S. International Competitivenes
1. 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
15. “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.
16. Manufacturing Jobs and Overall Job Growth Are Related
30%
19% 20%
20%
10%
4.50%
0%
-1%
Overall Job Growth
-7%
-10%
-20% Manufacturing Jobs Decline
-30%
-32%
-40%
1980s 1990s 2000-2008
16
23. U.S. Manufacturing Job Growth is Worst in OECD Sample
100%
90%
80%
70%
60%
manuf job growth
as share of pop
50% growth -97-2010
40%
30%
20%
10%
Correlation between change in
manufacturing jobs from 87 to
0%
2005 and total change in
employment from 2005 to 2010
was 0.57.
23
24. Sum of Annual Real GDP Changes
35
30
25
20
15
10
5
0
1980-89 1990-1999 2000-2009
24
25. Manufacturing Contribution to Sum of Annual Real GDP Change
8.00%
6.00%
4.00%
2.00%
0.00%
80's 90's 2000's
-2.00%
-4.00%
-6.00%
25
26. Sum of Annual Real GDP Changes Had Manufacturing Shares Not Declined
35
30
25
20
15
10
5
0
1980-89 1990-99 2000-09
26