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UCLA Report: Weak GDP Growth Stagnates Nation’s Middle Class

Image: UCLA Report: Weak GDP Growth Stagnates Nation’s Middle Class
Job seekers attend a May 29 career fair in Rolling Meadows, Ill.

By    |   Wednesday, 05 Jun 2013 06:17 PM

The nation’s middle class continues to stagnate because weak growth in the gross domestic product is not producing enough good jobs, according to a report from UCLA released on Wednesday.

"Growth in GDP has been positive, but not exceptional," UCLA economists wrote in their quarterly Anderson Forecast. "Jobs are growing, but not rapidly enough to create good jobs for all."

The report analyzed long-term trends of past economic recoveries, finding that the long-anticipated "Great Recovery" has not yet materialized, the Los Angeles Times reports.

Real growth in the nation’s GDP, the value of goods and services produced after adjusting for inflation, is 15.4 percent below the 3 percent growth trend of past recoveries, according to Edward Leamer, director of the UCLA Anderson Forecast.

Stronger growth will be necessary to bring the current recovery in line with previous ones.

"It's not a recovery," he wrote. "It's not even normal growth. It's bad."

The nation's tepid economic growth also is fueled by too much government spending paid for by too much borrowing, the report said.

"The big problem is Uncle Sam, who even four years since the recession ended is running deficits equal to 7 percent of GDP," Leamer said. "And this accounting ignores unfunded liabilities for Medicare, Social Security, and state and local pensions."

He noted that the Congressional Budget Office estimated that $220 trillion in federal government liabilities remained unfinanced.

"That's big," the report concluded. "That’s really big."

The low economic growth has long-term implications for the United States, as technological advancements continue to displace workers — and the nation's educational system fails to sufficiently develop the workforce of the future, the report says.

"Regrettably, we have too many high-school dropouts, and too many high-school graduates and too many college graduates offering to do only mundane, codifiable tasks because they are not prepared for the reality of the labor markets of the 21st Century," the report says.

"Regrettably, most classrooms remain very large and inefficient Xerox machines, where the lecturer reads the lectures, and the students copy it down. Regrettably, we reward teachers if their students can regurgitate the in¬formation on standardized tests."

Future workers will need creative and analytical thinking skills for 21st century jobs, Leamer said in the report.

"What's left for American workers to do are the functions not yet done better by machines — creative problem-solving and analytic thinking," he said.

However, the UCLA report does predict a falling national unemployment rate: to 6.6 percent, from the current 7.5 percent, by 2015 — but "due in part to a growing base of discouraged workers dropping out of the labor force."


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The nation s middle class continues to stagnate because weak growth in the gross domestic product is not producing enough good jobs, according to a report from UCLA released on Wednesday.
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2013-17-05
Wednesday, 05 Jun 2013 06:17 PM
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