LOS ANGELES, June 20 (Xinhua) -- U.S. economy will remain weak
in the near-term and inadequate workforce development is the "real
Main Street problem," according to a forecast report released here
Wednesday.
In its second quarterly report of 2012, the University of
California, Los Angeles (UCLA) Anderson Forecast's outlook for the
U.S. says that Gross Domestic Product (GDP) and job formation in
the U.S. will remain weak in the near-term, mirroring conditions
that have prevailed for the last two years.
GDP growth is forecasted to be 2.4 percent by the end of 2013,
increasing to 3.4 percent in 2014. The unemployment rate by the end
of 2013 should be 7.7 percent. The forecast assumes that the
Federal Reserve cannot risk a rate increase, particularly if the
nation experiences the forecasted inflation rate of 1.6
percent.
In California, slow and steady gains are anticipated throughout
2012. More accelerated growth in 2013 and 2014 could see
California' s unemployment rate decrease to 7.7 percent by the end
of 2014, which is within 0.6 percent of the U.S. rate.
The most impressing part of the report is the analysis by UCLA
Anderson Forecast Director Ed Leamer, who speculates the economic
factors will become the engines of growth for the U.S. economy. [
In the report titled "Wall Street, K-Street or Main Street? Who Can
Save US?", Leamer suggests that the "distraction" is caused by
focusing on the financial sector (Wall Street) and the federal
government (K-Street) is causing most to miss the "real Main Street
problem." That is the inadequate workforce development for 21st
century labor markets.
"Which Street can save us? Wall Street, K-Street or Main Street?
Which Street can do something dramatic to make the U.S. economy go
again at full throttle, put Americans back to work and give us all
some big raises again?" Leamer asked.
Leamer said neither Wall Street and the U.S. financial system
nor K-Street saved the U.S. economy.
"I think the problem lies elsewhere and is deeper and more
long-lasting than many imagine. Excessive focus on Wall Street and
K Street is distracting us from the real Main Street problem --
inadequate workforce development for the 21st Century labor
markets," said Leamer.
He said this problem is not entirely new. Four decades ago, new
competition for American physical labor started to emerge. In the
1960s, robots and automation appeared. In the 1970s, it was faraway
foreigners.
That was tough on the blue-collar workers but white-collar
workers generally did well. They kept their jobs and received
increases in real earnings because all that competition lowered the
cost of manufactured "tradables" and labor-intensive local
services, according to Leamer.
But there has emerged a very real threat to those white collar
workers -- the microprocessor, Leamer said.
"Every day there is a job in your neighborhood being done by a
microprocessor. In the near future, every mundane and modifiable
task will be performed either by low-wage workers in developing
countries or by robots or microprocessors. As a consequence, the
globe is suffering from a serious glut of workers who are able to
do only the mundane physical and intellectual tasks," according to
Leamer.
"The solution is developing workforce. We have to accept the
fact that two bubbles have disguised the inferior quality of our
educational system. Good jobs in the United States in the 21st
Century will require humans to do things that are not suited to the
capabilities of faraway foreigners, robots or microprocessors,"
Leamer said.
"We need a workforce that can think creatively and solve the new
problems, not merely recall the solutions to old problems. Even the
high-quality 20th Century high school education isn't enough any
more, not to mention the high school dropouts, the nearly
illiterates or innumerate high school graduates," according to
Leamer.
But Leamer expressed that there was another critical workforce
development problem. After graduation, workers really begin to
learn what the work is all about from their first job.
"The second failure of our national workforce development is
plummeting employment to population ratios of our youth," said
Leamer.
The transition from industrial to post-industrial economy is one
of two structural adjustments. The other one occurring at the same
time is the shift from a spending society to a saving society, as
individuals and governments at every level try to get their balance
sheets in line with their future retirement obligations, Leamer
said.
Leamer stressed that the U.S. should focus more on manufacturing
than shopping.
"If the consequent weak demand from consumers and governments is
somehow going to be replaced, the most likely component of GDP is
exports. Metaphorically skeaking, we need to turn our shopping
malls into factories," said Leamer.
UCLA Anderson Forecast is one of the most widely watched and
often-cited economic outlooks for California and the U.S.. It was
credited as the first major U.S. economic forecasting group
declaring the 2001 recession. Enditem
