Matthew Slaughter discusses the state of the U.S. and global economy. He argues the glass is both half-full and half-empty, with positive trends like private sector job growth and declining deficits, but also challenges around slowing growth, rising inequality, and uncertain global economic conditions. Whether the outlook improves depends on government leaders enacting policies to spur dynamism through issues like immigration reform, trade agreements, and tax reform. Slaughter ultimately expresses optimism that current students will provide the leadership needed to address economic problems.

1. What’s Next
for the U.S. and Global Economy?
Is the Glass Half-Full or Half-Empty?
Matthew J. Slaughter
Tuck School of Business at Dartmouth,
NBER, and CFR
Tuck Reunion Weekend
Hanover, NH
October 11, 2014

2. Outline of This Morning’s Conversation
• What Lies Ahead for the U.S. and Global Economy
Amidst Ongoing Uncertainties?
• The Glass Is Both Half-Full and Half-Empty.
Whether It Fills or Drains Depends a Lot on
Whether Government Leaders Do the Right Things.
• Disclosure: I Am an Independent Tigger.
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3. The Glass
Is Half-Full
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4. Jobs: The Private Sector Is Creating Them
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• 55 consecutive months of private-sector job growth—the
longest such streak in U.S. history.
Source: U.S. BLS

5. Jobs: The Private Sector Is Creating Them
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• Unemployment has fallen by 1.3 percentage points in the
past 12 months, the sharpest such decline in a generation.
Source: U.S. BLS

6. 6
Output: It Continues to Expand
• In 18 of the 20 quarters since the crisis-related recession
ended, Gross Domestic Product has expanded.
Source: U.S. BEA

7. 7
The Deficit: It Has Shrunk a Lot
• After 2009-2012 deficits that totaled about $5 trillion, 2014
federal fiscal deficit was only about $500 billion.
Source: U.S. CBO

8. The World: It Continues to Grow
8 Where in the world was this in 1990?

9. A Picture That Is Worth a Thousand Words
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IMF reports/estimates emerging-market annual GDP growth
2012-2015 of 5.1%, 4.7%, 4.4%, and 5.0%.

10. The Glass
Is Half-Empty
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11. The World: Can BRIC-and-Beyond Countries
Enact Policies to Not Have Growth Slow More?
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Source: The Financial Times

12. The World: Can BRIC-and-Beyond Countries
Enact Policies to Not Have Growth Slow More?
• “China is unbalanced, unsustainable, and uncoordinated … the
economy is encountering new problems; there is downward
pressure on economic growth.” --Premier Wen, 2013
• “The reform in China has come to a critical stage. The gains we
have made in reform and development may be lost, new
problems that have cropped up in China’s society cannot be
fundamentally resolved and such historical tragedy as the
Cultural Revolution may happen again.” --President Hu, 2013
• “This government is committed to the poor, millions of youth of
the country, to the mothers and sisters hankering for respect and
honor, to exploited rural and urban workers. The poorest of the
poor sent me here. Our dream is to fulfill their dreams.”
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--Prime Minister Modi, 2014

13. The World: Can BRIC-and-Beyond Countries
Enact Policies to Not Have Growth Slow More?
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14. The World:
Can Eurozone Avoid Deflation and Create Jobs?
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15. The World:
Can Europe Avoid Deflation and Create Jobs?
Source: The Financial Times 15

16. The World:
Can Europe Avoid Deflation and Create Jobs?
Source: Mario Draghi, ECB 16

17. The World:
Can Central Bankers Wing It With No Playbook?
Source: The Financial Times 17

18. 18
The Deficit:
We Are in The Calm Before the Storm

19. Output: Why Is America’s Speed Limit Slowing?
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• Even before the World Financial Crisis, post-2000
economic growth in America was slowing relative to 50
earlier years. Source: U.S. BEA

20. Jobs (and My Gray Hair):
The Rising Tide Has Not Been Lifting All the Boats
• Change in U.S. average real total money earnings, by
educational group, 2000 through 2013.
Group Employment Share Earnings Change
HS Dropout 8.0% -5.8%
HS Graduate 26.8% -6.7%
Some College 27.8% -10.9%
College Grad. 23.4% -11.2%
Masters 10.0% -7.6%
PhD 1.9% +4.5%
MD,JD,MBA 2.1% +12.3%
• 2013 real median income for U.S. households was
$51,939. This was $493 below its level in 1989.
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21. Will the Glass
Fill or Drain?
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22. Will Government Leaders Spur Dynamism
via High-Skilled Immigration Liberalization?
How Many New H-1B Visas Does USG Allocate Each Year?
How Many Visa Applications Did USG Receive for FY 2015?
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“How America Loses a Job Every 43 Seconds”
My Wall Street Journal Op-Ed 3/26/14

23. Will Government Leaders Spur Dynamism
via Trade and Investment Liberalization?
“[N]ew trade partnerships with Europe and the Asia-Pacific will help
them [U.S. companies] create even more jobs. We need to work
together on tools like bipartisan trade promotion authority to protect
our workers, protect our environment and open new markets to new
goods stamped ‘Made in the USA.’” –President Obama, 1/28/14
“I’m against fast-track [negotiating authority]. I think everyone
would be well-advised just not to push this right now … Everyone
knows how I feel about this.”
–Senate Majority Leader Harry Reid, 1/29/14
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“High-Trade Jobs Pay Higher Wages”
My Wall Street Journal Op-Ed 1/22/14

24. Will Government Leaders Spur Dynamism
via Corporate-Tax Reform?
“The Free-Trade Way to Job Growth” 24
My Wall Street Journal Op-Ed 10/2/14

25. Does This Picture Make You More or Less
Confident about Dynamism Being Spurred?
www.voteview.com
(McCarty, Poole, and Rosenthal)
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26. Closing
Thoughts
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27. Will This One Be in the History Books?
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28. Reading Something Like This?
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29. Do Americans Today
Think It is Sunrise or Sunset
• “Do you think America is in a state of decline, or do
you feel that is not the case?” (WSJ-NBC Aug. 2014)
– Not in a state of decline: 31%
– In a state of decline: 65%
• “U.S. Right or Wrong Track?” (WSJ-NBC Aug. 2014)
– Headed in the Right Direction: 22%
– Off on the Wrong Track: 71%
• “Do you feel confident or not confident that life for
our children’s generation will be better than it has
been for us?” (WSJ-NBC)
– October 1990: 50% Confident vs. 45% Not Confident
– December 2001: 49% Confident vs. 42% Not Confident
– August 2014: 21% Confident vs. 76% Not Confident 29

30. 30
Sunrise or Sunset Around the World?

31. Where Are the Leaders To Bring on Sunrise?
• “In my more than 50 years in business, I
cannot recall a time when there were so many
daunting national challenges, with business
engagement so lacking. This was not always
so … It’s time to get off our butts, cure
ourselves of an aggravated case of short term-itis
… It’s time to do the right thing, not just to
protect our kids and grandkids but to safeguard
our remarkable country’s future.”
– Peter G. Peterson, “Business Is Missing in Action,”
BusinessWeek 11/16/09
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32. Concluding Thought:
They Are Right Here
• Despite all the challenges facing the world, the
opportunity for principled and wise leaders has
never been greater.
• Rest assured that every Tuck student here
today—and we faculty and staff as well—are
working hard to provide the leadership that the
world so desperately seeks to fill that glass.
– Leadership in the Global Economy course
– The Center for Global Business and Government
– The Slaughter and Rees Report
http://cgbg.tuck.dartmouth.edu/research-cgbg/slaughter-rees-report 32

33. Thank You.
Enjoy the Rest of
Reunion!
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