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UCLA Anderson Forecast: What Economic Recovery?

By    |   Thursday, 06 June 2013 08:02 AM

The United States is not in a real economic recovery from the Great Recession, and in fact, growth is sub-normal and inadequate to bring the nation back to firmer footing, according to the bleak findings of the latest UCLA Anderson Forecast.

The quarterly report, from UCLA's Anderson School of Management, includes an essay entitled "Great Recovery: Wherefore Art Thou" by UCLA Anderson Forecast Director Ed Leamer that concludes gross domestic product (GDP) growth is still 15.4 percent below normal four years after 2009's recession trough.

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

Editor's Note:
 
'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

Leamer's daunting math calculates that in order to regain a normal 3 percent GDP growth trend, the United States now needs to grow 4 percent for 15 years, 5 percent for eight years or 6 percent for five years — a tall order from the current 2.1 percent growth rate over the past four years.

The nation's tepid growth conceals the fundamental national problems of too much government spending funded with too much borrowing, too little national savings to cover late-in-life health care issues and too many workers lacking the skills to compete in the modern economy, according to Leamer.

And the kinds of jobs being created in the current environment may not ensure workers a secure future.

He said the punkish growth rate has long-term ramifications in the face of technological advances that are displacing workers and an educational system that falls short in preparing students for the future, the Los Angeles Times reported.

The UCLA Anderson Forecast predicts that by 2015, real GDP will edge up to 3 percent, the Fed funds rates will remain near zero and the U.S. jobless rate will fall to 6.6 percent due in part to a growing base of discouraged workers.

Leamer said the bright spot in the forecast is that the nation is in the early stages of a housing recovery and that housing starts will climb back to normal by 2015.

Meanwhile, Forbes blames U.S. unemployment problems on Washington, saying the Federal Reserve's "zero interest rate policies amount to a war on jobs."

"The persistent, extremely low interest rates are dampening worker demand and keeping real wages from keeping pace with productivity. Hiring lags while wages stagnate," Forbes stated.

"No wonder unemployment stubbornly remains high, and more and more workers are simply dropping out of the labor force."

The "perverse outcome" of Fed policy forces employers who want to expand production to either hire more workers or to invest in new machinery and technology. Employers appear to be doing the latter in many cases, according to Forbes.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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The United States is not in a real economic recovery from the Great Recession, and in fact, growth is sub-normal and inadequate to bring the nation back to firmer footing, according to the bleak findings of the latest UCLA Anderson Forecast.
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2013-02-06
Thursday, 06 June 2013 08:02 AM
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