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United states-2018-oecd-economic-survey-sustaining-growth-and-raising-employment

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Presentation of the 2018 Economic Survey of the United States

Published in: Economy & Finance

United states-2018-oecd-economic-survey-sustaining-growth-and-raising-employment

  1. 1. OECD ECONOMIC SURVEY UNITED STATES 2018 Sustaining growth and raising employment Washington D.C., 6 June 2018 http://www.oecd.org/eco/surveys/economic-survey-united-states.htm @OECDeconomy @OECD
  2. 2. The expansion is continuing 12 13 14 15 16 17 18 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Real GDP Trillion USD (2009 prices) Source: OECD Analytical Database. 2
  3. 3. Unemployment continues to fall Source: OECD Analytical Database. 3 5 7 9 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Unemployment rates United States G7 OECD % of the labour force 3
  4. 4. Fiscal stimulus is boosting growth 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 2017 2018 2019 2017 2018 2019 United States G20 excluding US %% Impact of US fiscal stimulus Source: OECD Economic Outlook 103. 4
  5. 5. Growth is projected to strengthen 2017 2018 2019 Gross domestic product (GDP) 2.3 2.9 2.8 Private consumption 2.8 2.5 2.2 Government consumption 0.1 2.2 4.3 Gross fixed capital formation 3.4 4.9 4.7 Exports of goods and services 3.4 4.8 4.4 Imports of goods and services 4.0 5.3 5.3 Unemployment rate 4.3 3.9 3.6 Personal consumption expenditures deflator 1.7 2.2 2.2 Note: annual growth rates, with the exception of the unemployment rate, which is % of the labour force. Source: OECD Economic Outlook 103. 5
  6. 6. The government deficit is set to rise Source: Bureau of Economic Analysis, OECD. Federal government net saving as a % of GDP, calendar year 6
  7. 7. Higher growth and spending restraint are needed to stabilise public debt Source: OECD calculations. Federal debt held by the public, % of GDP, fiscal years 7 50 60 70 80 90 100 110 120 130 140 150 50 60 70 80 90 100 110 120 130 140 150 2015 2020 2025 2030 2035 2040 Baseline Making tax reforms permanent Higher GDP growth and slower spending growth
  8. 8. Inflation is returning to target 1. Personal Consumption Expenditures excluding food and energy price index. Source: OECD Analytical Database. 8 -2 -1 0 1 2 3 4 5 6 2006 2008 2010 2012 2014 2016 2018 CPI PCE Core¹ Y-o-y % changes Inflation target
  9. 9. Monetary policy is tightening -1 0 1 2 3 4 5 6 -1 0 1 2 3 4 5 6 United States Euro area Japan% % Note: Policy rates are the federal effective funds rate for the United States, the main refinancing operations for the euro area and the complementarity lending facility rate for Japan. Source: OECD Analytical Database. 9
  10. 10. • Implement the recently-passed corporate tax reform and make the temporary investment incentives set to expire to be permanent. • Ensure long-term sustainability by reining in spending growth, particularly by reforming entitlement programmes where appropriate. • Continue to raise interest rates at a gradual pace as long as inflation remains close to the Fed’s target and the labour market remains close to full employment. Recommendations to sustain economic growth 10
  11. 11. Labour productivity growth has been weak after the crisis Source: OECD Analytical Database. 11 0.0 0.5 1.0 1.5 2.0 2.5 1997-2007 2008-2017 Labour productivity Average annual growth OECD United States
  12. 12. Business investment1 has begun to recover 1. Private non-residential fixed investment Source: BEA and OECD calculations. 12 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Intellectual property products Structures Equipment Private non-residential fixed investment (forecast) Contributions to annual real GDP growth Contributions to annual real GDP growth 2019
  13. 13. Business dynamism has slowed Notes: Number of enterprise entries and exits in year t over number of active enterprises in year t. Data for the United States are estimated in 2013-15, using separate data from the US Census Bureau. The Euro Area estimates are an unweighted average of entry and exit rates in member states Source: OECD Economic Outlook, Volume 2017 Issue 2. 13 0 2 4 6 8 10 12 2002 2004 2006 2008 2010 2012 2014 % A. Entry rates United States Euro area Japan 2015 0 2 4 6 8 10 12 2002 2004 2006 2008 2010 2012 2014 % B. Exit rates United States Euro area Japan 2015
  14. 14. Restrictive regulations on businesses can be reduced Source: OECD Product Market Regulation database. 14 0 0.4 0.8 1.2 1.6 2 2.4 2.8 Least restrictive OECD USA Most restrictive Scale 0 (least) - 6 (most restrictive) NLD TUR OECD Product Market Regulation indicator Latest year available
  15. 15. Room to reduce obstacles to trade in services Notes: the index includes regulatory transparency, barriers to competition, other discriminatory measures, restrictions on movement of people and restrictions on foreign entry. Source: OECD Services Trade Restrictiveness Index (STRI). Scale from 0 (least) to 1 (the most restrictive), 2017 15 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0 0.1 0.2 0.3 0.4 0.5 0.6 Telecom Distribution Railfreighttransport Motionpictures Soundrecording Accounting Roadfreighttransport Computer Architecture Legal Logisticsstorageand warehouse Engineering Logisticsfreightforwarding Commercialbanking Logisticscustomsbrokerage Logisticscargo-handling Construction Broadcasting Insurance Maritimetransport Courier Airtransport United States Best OECD Average OECD
  16. 16. Reducing trade barriers further could boost trade 0 1 2 3 4 5 6 7 8 World United States European Union China % Real Import demand Real Export demand Note: Scenario in which tariffs are reduced by all G20 economies to the lowest level applied by any G20 country. With the exception of food and textiles the lowest tariff rate is 0. Source: OECD METRO model simulations. Increase in trade from multilateral tariff reductions Estimated medium-term impact of lowering tariffs in all G20 economies 16
  17. 17. Trade has been an important driver of job growth -10 -5 0 5 10 15 20 25 30 35 -10 -5 0 5 10 15 20 25 30 35 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Exports Domestic demand Note: Index of employment in export and final domestic demand sectors, 2005 = 0 Source: OECD Inter-Country Input-Output (ICIO) tables. U.S. employment embodied in exports and domestic demand, accumulated growth 17
  18. 18. • Ease restrictions in services trade. • Direct state control over business enterprises is relatively high. Privatise state-owned utilities and transport authorities. • Regulatory protection for incumbents is relatively high in some markets. Remove exemptions from anti-trust law, including in the digital economy. • Technological change creates challenges for the competition authorities as large market shares may create barriers to competition. Broaden merger analysis to ensure greater competition. Recommendations to boost productivity 18
  19. 19. Labour force participation not yet at pre-crisis levels Note: OECD refers to a simple average. Prime age includes individuals between the ages of 25 and 54. Source: OECD Employment and Labour Market Statistics 80 82 84 86 88 2006 2008 2010 2012 2014 2016 2018 % Prime age participation rates OECD USA JPN GBR 19
  20. 20. Workers receive relatively little support to find new jobs 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 MEX USA¹ JPN LVA ISR CHL SVK AUS CAN SVN KOR CZE POL ITA NOR OECD PRT IRL CHE ESP DEU LUX BEL AUT NLD HUN FIN FRA SWE DNK % of GDP% of GDP 1. Includes Temporary Assistance for Needy Families (TANF) work-related activities. Other TANF expenditure (0.20% of GDP) is not included. Source: OECD Labour Market Programme Database. Public spending on Active labour market policies (ALMPs), Latest available date 20
  21. 21. Some young people struggle to enter the labour market 0 5 10 15 20 25 30 35 0 5 10 15 20 25 30 35 ISL NLD DNK LUX JPN CHE DEU SWE NOR CZE AUS SVN NZL AUT EST BEL CAN GBR USA OECD SVK FIN HUN ISR POL LVA IRL CHL PRT FRA MEX GRC ESP ITA TUR % of 20-24 year-olds% of 20-24 year-olds Source: OECD Education at a Glance: Transition from school to work database. 20-24 year-olds not in employment, education or training (NEET), latest available date 21
  22. 22. Labour force participation rates vary a lot across the United States Note: Civilian noninstitutional population ages 16 and older Source: Bureau of Labor Statistics. 22
  23. 23. Inter-State migration has slowed Source: U.S. Census Bureau, Current Population Survey. 23 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 1980 1990 2000 2010 Migration rate between states 1980-2017 2017
  24. 24. Housing cost overburden Source: OECD Affordable Housing Database. 24 0 10 20 30 40 50 60 70 …on rents (private tenants) ...on mortgages % of population in the bottom quintile spending more than 40% of disposable income on rents or mortgages OECD United States
  25. 25. Occupational licensing adds to constraints on mobility 0 5 10 15 20 25 30 35 40 45 50 0 5 10 15 20 25 30 35 40 45 50 Total Private industries Federal State Local Self-employed workers, unincorporated Source: Bureau of Labor Statistics. % of employed with a certification or licence 25
  26. 26. • Promote active labour market policies, such as job placement services and support to geographic mobility. • Increase investment in infrastructure, (making use of greater private-sector financing, user fees and flexible risk-sharing arrangements). • Expand the use of apprenticeships and on-the- job training to ease the school-to-work transition. Recommendations for helping workers find jobs 26
  27. 27. • Reform the GSEs to redirect housing support to the rental market. • Use federal money to encourage States and localities to remove zoning restrictions. • Encourage State and local governments to deregulate occupational licensing. Recommendations to reduce barriers to mobility 27
  28. 28. Well-being is generally high Source: OECD Better Life Index database. 28 28 25 19 19 16 15 14 14 5 2 1 Work & life balance Personal security Social connections Education & skills Health status Jobs & earnings Subjective well-being Environmental quality Civic engagement & governance Housing Income US position in OECD country ranking (1 to 35) US position in OECD country ranking (1 to 35) Indicators of well-being 20% top performers 60% middle performers 20% bottom performers United States
  29. 29. Gains in life expectancy have stalled recently Source: World Bank Development Indicators (WDI). 65 70 75 80 85 90 1965 1975 1985 1995 2005 2015 A. Total population Japan United States OECD members Years 65 70 75 80 85 90 1965 1975 1985 1995 2005 2015 B. Male population Japan United States OECD members Years 65 70 75 80 85 90 1965 1975 1985 1995 2005 2015 C. Female population Japan United States OECD members Years Life expectancy at birth 29
  30. 30. Deaths from overdoses are rising Source: National Center for Health Statistics. 30 0.0 2.5 5.0 7.5 10.0 12.5 15.0 1999 2002 2005 2008 2011 2014 Overdoses deaths involving opioids Per 100,000 resident population 2016
  31. 31. Too many opioids are prescribed 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 USA rest of OECD Daily doses per million inhabitants per day Source: National Center for Health Statistics and OECD calculations. 31
  32. 32. Low labour force participation and high opioid use are closely connected 50 55 60 65 70 75 50 55 60 65 70 75 20 30 40 50 60 70 80 90 100 110 120 130 Participation rateParticipation rate Opoid prescribing rate per 100 persons Source: Bureau of Labor Statistics, Centers for Disease Control and Prevention. By State, 2016 32
  33. 33. • Adopt best practice for opioid prescriptions. • Improve access to drugs that can reverse the effects of opioid overdoses. • Promote and expand medically assisted treatment options. • Help reintegrate into employment those who have successfully completed treatment for addiction. Recommendations to address the opioid crisis 33
  34. 34. 34 Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Follow us on twitter: For more information http://www.oecd.org/eco/surveys/economic-survey-united-states.htm OECD Economics OECD 3

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