At USCIB event, Gurría unveils latest U.S. economic survey
The U.S. economy will continue to rebound from recession, but at a relatively slow pace and with continued high unemployment, according to the latest OECD economic survey of the United States. The 2010 survey was presented September 20 by OECD Secretary General Angel Gurría at a USCIB breakfast in New York.
USCIB Chairman Harold McGraw III hosted the event at the Midtown headquarters of The McGraw-Hill Companies, where he serves as chairman, president and CEO. Timed to coincide with the week’s UN-related activities in New York, the breakfast provided USCIB members, friends and the media with an opportunity to explore the OECD’s findings in depth.
“It is becoming increasingly clear that the economy has entered a soft patch,” according to Mr. Gurría. “But this is not inconsistent with previous recoveries. We don’t see a risk of a double-dip recession. That said, we don’t see either a recovery that is strong enough to put a significant dent in unemployment.”
The OECD chief said that macroeconomic support should be maintained in the short term. “In this regard, we welcome the announcement of Chairman Bernanke that the Federal Reserve would be prepared, if necessary, to provide additional stimulus.”
The report addresses the need for government support of the U.S. labor market, as well as longer-term objectives of restoring fiscal discipline and tackling global climate change.
The survey recommends that training and education programs for the unemployed be prolonged to help workers adapt to the post-recession economy. Such programs, it says, could potentially play an important role in facilitating the return to the job market of workers whose skills have been affected by a long spell of unemployment.
The OECD also argues that the best way to strengthen the public finances would be to make public spending more efficient, in particular health care programs. In this respect, Mr. Gurría stated, recent U.S. health care reform, which includes measures to reduce the growth in health care spending, is an important landmark.
The OECD urges the U.S. government to take additional steps to reduce the debt-to-GDP ratio, since spending cuts restraint alone are “unlikely to suffice,” it says.
“Barring cuts in entitlements and defense spending, which are currently not on the policy agenda, taxes will likely have to increase to stabilize the debt-to-GDP ratio by the middle of the decade and put it on a downward path thereafter,” according to the survey.
Moreover, the survey argues that the United States needs to play a pivotal role in a global agreement to reduce greenhouse gas emissions. In that respect, according to the report, government support for emission-reducing technologies is important but insufficient without the right incentives in place.
Putting a price on carbon, either through a carbon tax or a cap-and-trade scheme, is the key to providing the correct incentives for a greener economy. It would also be less economically costly than purely regulatory approaches.
OECD country surveys are issued approximately every two years and are the result of the OECD’s peer-review process. Policy recommendations in the reports are endorsed by the 33 OECD member countries, including the United States.
USCIB provides American business views to the OECD and its member governments through its affiliation with the Business and Industry Advisory Committee to the OECD, which groups leading industry associations from all the OECD nations.
A summary of the OECD’s 2010 Economic Survey of the United States is available at www.oecd.org/eco/surveys/us.
Staff contact: Ronnie Goldberg