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2018 OECD Economic Surveys: United States 2018

image of OECD Economic Surveys: United States 2018

The current expansion in the United States is one of the longest on record. Economic growth since the financial crisis has also been amongst the strongest in the OECD. Robust job growth has helped bring people into employment and reduce the unemployment rate. Partly as a result, material wellbeing is high and Americans are doing well on average in comparison with residents of other OECD counties. The near-term outlook for growth is strong, partly as a result of substantial fiscal stimulus. In the longer run, improving the business environment would help sustain growth, by reanimating firm creation and productivity growth. Labour force participation rates of prime age workers are relativley low and have only recently begun to recover from the decline after the crisis. Job losses have become more persistent in areas hit by adverse structural shocks, contributing to the decline in participation. In addition, changing jobs has become more difficult over time, which is a concern with the potential for automation and globalisation to disrupt local labour markets. Labour market participation is also adversely affected by opioid addiction, which also costs many lives, harms livelihoods and entails significant public healthcare spending.

SPECIAL FEATURES: LABOUR-MARKET DISRUPTIONS FROM TRADE AND AUTOMATION; OPIOIDS AND EMPLOYMENT

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Key policy insights

The current expansion is now one of the longest on record and amongst the strongest recoveries in the OECD. Only the expansions during the 1960s and 1990s are of comparable length since records began in 1854. The expansion has been job rich and has helped bring people back into the labour market, but the rate of output growth has been modest (Figure 1). While well-being has benefited from job growth, the legacy of the great recession and past structural shocks - such as globalisation and automation - remains painfully visible across the country, notably in the industrial heartland. Joblessness, non-participation and poverty are concentrated in distressed cities, notwithstanding robust job growth in coastal areas and well-connected metropolitan areas (Weingarden, 2017[1]; Austin, Glaeser and Summers, 2018[2]). This has been exacerbated by fewer opportunities to thrive irrespective of one’s origin, which is central to the American social model. The dislocation of opportunities is also associated with the opioid epidemic, which tends to be most pronounced in areas suffering from employment loss. In addition, not all families have enjoyed the benefits of economic growth and workers are worried about the impact of automation on their lives (Smith and Anderson, 2017[3]).

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