According to a panel of Chicago Booth economists, The United States economy is on the road to 3 percent growth this year, but it will come with a few potholes along the way. The economists gave their opinions on the matter at Economic Outlook 2015 in New York.
The panel was made up of Randall S. Kroszner, Norman R. Bobins Professor of Economics, Erik Hurst, V. Duane Rath Professor of Economics and the John E. Jeuck Faculty Fellow, and Carl R. Tannenbaum, AB ’81, MBA ’84, senior vice president and chief economist at Northern Trust Corp.
“The outlook is a little bit cloudy,” said Kroszner. “The fundamentals are there to get into the 3 percent range for the next year, but some challenges are ahead.”
As consumers are showing an appetite for spending and energy prices continue to slide, Kroszner sees the economy growing. But potholes, as he cautioned, make 3 percent growth “fragile.” Consumers are saving a little more than before. And while tax reform could lead to an influx in corporate investment, Obama’s proposed budget includes $1.4 trillion in new taxes over the next five to 10 years.
Hurst sees labor market weakness and income equality as potential traps.
“Employment is growing, but jobs are not being filled with people with less than a college degree,” Hurst said. “Prior to the Great Recession, 15 percent to 17 percent of men without a four-year degree were away from the labor force. That skyrocketed to 25 percent after the recession, and they’re not seeing a huge rebound.”
According to Hurst thought, the picture could change as less-skilled workers acquire computer technology and health care training. But the effects won’t be seen for a while.
“We’re starting to see younger cohorts acquiring these skills,” he said, but there’s a chunk of people who are sitting idle. You can trace the people who used to work in manufacturing and today, they’re the ones showing up in the non-employment statistics.”
Information used in this post come from this press release from the Chicago Booth website.