Monday, January 17, 2011
Larry Summers: More jobs are coming
Despite the high unemployment rate, Larry Summers seems to give a very optimistic outlook on the current economic situation in the United States. Having been President Obama's chief economic advisor and secretary of treasury under Bill Clinton, Larry Summers has a very highly respected background in the business and economic worlds. He states, "I think the prospects for starting to see significant employment growth and reductions in unemployment right now are better than they've been in the United States in a number of years". This is a statement that we frequently hear as there is an extraordinary amount of analysis on the current economic situation and what is to come. On the other hand, this comment doesn't just passes over one's head when the remark is coming from a person with such great knowledge on the subject. Summers expects the economy to grow at a rate of 3% to 4% in the next few years. When discussing specific jobs, Larry Summers believes that employment in the construction industry is going to decrease tremendously while the IT and Health Care industries are much more likely to experience future job growth. He attributes the expected drop in demand in the construction industry to the large amount of current vacancies in houses and buildings. As a way to possibly prevent this fall in demand, Summers suggests infrastructure projects in order to create more jobs in construction.
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3 comments:
I think there are reasons and evidences to back Larry up. I have worked with this HR company, Express Employment Professionals and according to their Jobs bank, the number of jobs generated in the services are growing fast around the end of 2010.I believe this is a good sign that the economy is starting to roll again.
Also interesting to note the tax compromise which was considered by most a necessity. While the government would receive more money, most consumers would be battered with higher taxes that lower their disposable income, obviously setting up a huge road block for the recovery.
The trend toward service and technology jobs may be a paradigm shift in our labor market. Many people would agree with John McCain, who when he was campaigning in Michigan told voters that they would not see the manufacturing jobs return to their state, they were off to China for good. Although this spells trouble for our manufacturing industry, it may just be specialization at work. Asian countries are often able to produce the same manufactured goods that Americans used to produce, at a fraction of the cost. This may illustrate that they have a comparative advantage and we can benefit from it.
The U.S movement away from manufacturing and towards service/IT jobs, I think, is a good sign. These jobs tend to be higher paying jobs and they show evolution and growth of a labor market.
I agree with Summers that an investment in infrastructure may lead to a huge boost in the economy. It worked during the FDR era and we saw fantastic projects come out of it. Let's try it again.
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