Tags: Economic | Dynamism | America | Innovation | States

FT: 'Economic Dynamism' Plunging Across America

FT: 'Economic Dynamism' Plunging Across America
Roman Lipovskiy | Dreamstime.com

By    |   Thursday, 25 May 2017 10:18 AM

New research warns that America has essentially lost its economic mojo and must somehow get its groove back.

Just seven U.S. states have bucked this long-term trend since the last recession, the Financial Times reported.

The findings are in a report from the Economic Innovation Group (EIG), a research organization that has been tracking the troubling deterioration in America’s economic vibrancy, the Times explained.

The U.S. “has seen a long-term decline in business births, less migration between states, and a growth in the economic power of incumbent companies, sounding alarm bells in Congress,” the Times reported.

“America has seen a pervasive drop in the economic dynamism of every one of its states since the early 1990s as new business formation sinks and workers move jobs less frequently, according to new research that underscores the challenge the country faces in restoring its entrepreneurial verve,” the FT explained. EIG defined “economic dynamism” as the rate and scale of change in the economy brought about by the constant opening and closing of businesses, movement of workers to new areas, and regular turnover of jobs.

“Among the least economically vibrant parts of the U.S. are aging, industrial states clustered around the Great Lakes and Northeast, many of which swung in favor of Donald Trump in the last election. Ohio and Michigan were among those where the number of firms shrunk outright from 1992 to 2014, the period studied,” the FT said.

“The entrepreneurial and restless energy that once defined the United States seems to be evaporating as the economy grows more static, top-heavy, and concentrated,” the report found. “The decline of dynamism has been steep, rapid, and pervasive across all states,” the EIG report stated.

“In a less dynamic America, fewer people in fewer communities can start the businesses and find the jobs that will enable them to achieve the American dream,” said Steve Glickman, cofounder and executive director of EIG.

“Big incumbent companies have enjoyed the status quo for too long. We must turn our attention to the needs of true job creators – new businesses – by providing access to capital, reducing anti-competitive regulations, and enabling a concentration of talented young people. These are the building blocks to begin revitalizing our left-behind communities,” Glickman said.

To be sure, any hope for the future just may rest in embracing the pioneering spirit that helped build this great nation.

“These findings challenge the notion that Americans today are living in an era of unprecedented economic change and disruption,” said John Lettieri, cofounder and senior director for policy and strategy of EIG.

“Policymakers should be urgently focused on removing barriers to dynamism and promoting solutions that help America’s workers and entrepreneurs maximize their innovative potential.”

While the EIG study could spark worries, the solution to the problem may already reside in the White House.

Activist hedge fund manager Dan Loeb applauds the vigor and enthusiasm the election of Donald Trump as president has injected into the financial markets.

Loeb, who's more than doubled the S&P 500's return over the last two decades, told investors he doesn't plan on missing out on the final portion of this eight-year bull market.

"While we recognize that we are in the late stages of an economic cycle, experience has taught us not to miss the end of an expansive period," the Third Point manager wrote in the letter obtained by CNBC.

"This is especially true following Trump's election. Animal spirits matter in markets and despite the obstacles that the new administration will face in passing legislation, the overall pro-business environment is in sharp contrast to the last 'you didn't build it' administration's attitude towards business, enterprise, and free markets."

Meanwhile, many other respected economic voices are predicting robust growth and additional stock-market gains amid Trump's blueprint to truly "Make America Great Again."

David Horowitz, author of the best-selling book "Big Agenda: President Trump's Plan to Save America," told Newsmax TV that the market rally since Republican Donald Trump won the election has more room for gains as the president pushes his pro-business agenda.

“There's more upside. Starting from when he was president-elect he started this stock market boom,” he told Newsmax TV's “The Income Generation Show.”

“There will be corrections. There are going to be setbacks along the way like the healthcare which they hurried too fast. If you're looking over the long term of this administration I think the stock market is going to love Trump,” Horowitz said.

"Big Agenda: President Trump's Plan to Save America" is available at bookstores everywhere – or get your copy on Amazon – Click Here Now

(Newsmax wires services contributed to this report).

© 2020 Newsmax Finance. All rights reserved.

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New research warns that America has essentially lost its economic mojo and must somehow get its groove back.
Economic, Dynamism, America, Innovation, States
Thursday, 25 May 2017 10:18 AM
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