Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global...
-
Upload
holly-antonia-williams -
Category
Documents
-
view
218 -
download
1
Transcript of Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global...
![Page 1: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/1.jpg)
Professor Christian T. LundbladMay 2013
http://public.kenan-flagler.unc.edu/faculty/lundblac/
The U.S. & Global Economy: Navigating
the New Normal
2013 CAHEC Partners Conference
![Page 2: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/2.jpg)
Where are we now?
• Economic Output, Employment and Inflation• Monetary & Fiscal Policy• External Balance & Globalization
• Headwinds going forward…
© Prof. Christian T. Lundblad
![Page 3: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/3.jpg)
Where are we now?Slow recovery…
© Prof. Christian T. Lundblad
![Page 4: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/4.jpg)
Immediate Challenges:
© Prof. Christian T. Lundblad
![Page 5: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/5.jpg)
Where are we now?The Great Recession…. still…
© Prof. Christian T. Lundblad
![Page 6: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/6.jpg)
European Unemployment
© Prof. Christian T. Lundblad
![Page 7: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/7.jpg)
Where are we now?The Great Recession…. still…
© Prof. Christian T. Lundblad
![Page 8: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/8.jpg)
Youth Unemployment is a Particular Policy Concern
© Prof. Christian T. Lundblad
McKinsey.com
![Page 9: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/9.jpg)
• Structural Unemployment
• In the U.S., housing remains an issue
• Firms face elevated uncertainty and frictions
Headwinds: Unemployment
© Prof. Christian T. Lundblad
![Page 10: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/10.jpg)
Headwinds: Unemployment
McKinsey.com
These are not coming back in the same way
Serious questions about structural unemployment
© Prof. Christian T. Lundblad
![Page 11: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/11.jpg)
Headwinds: Unemployment“The Great Mismatch”
© Prof. Christian T. Lundblad
![Page 12: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/12.jpg)
Labor Adjustments…?Unemployment by States September 2012
Bls.gov
© Prof. Christian T. Lundblad
![Page 13: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/13.jpg)
Together, … Excess Capacity in the U.S.
Source: CBO
© Prof. Christian T. Lundblad
![Page 14: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/14.jpg)
Together, … Excess Capacity in the Europe.
© Prof. Christian T. Lundblad
![Page 15: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/15.jpg)
Financial Crises and Recessions Around the World
Downturns, while painful, are usually relatively brief
© Prof. Christian T. Lundblad
![Page 16: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/16.jpg)
Additional Contraction?
Despite all this, the baseline forecast (still) does not call for a so-called “double-dip”
Forecast Risks:(1) U.S. fiscal drag(2) Euro-area contagion(3) Global political instability
At best, will likely have more of the same for 2013-2014. (2% GDP growth)
The efficacy of active policy is necessarily limited in the face of these broader challenges.
![Page 17: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/17.jpg)
Macroeconomic Policy
Macroeconomic policy broadly describes the main levers that are available to the government to stimulate or re-direct economic activity
Fiscal & Monetary policy
Much of modern macroeconomic policy attempts to limit excess capacity (e.g. keep the economy at full employment)
© Prof. Christian T. Lundblad
![Page 18: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/18.jpg)
Fiscal Policy = Deficit Spending
© Prof. Christian T. Lundblad
![Page 19: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/19.jpg)
Monetary Policy = Interest Rate
(through 2015...?)
© Prof. Christian T. Lundblad
![Page 20: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/20.jpg)
Non-traditional Monetary Stimulus (QE)
© Prof. Christian T. Lundblad
![Page 21: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/21.jpg)
Road to Recovery
• The U.S. (and global) economy will not see a healthy recovery until significant long-run imbalances are rectified.
• This will take some time. In fact, a return to 2005 is undesirable.
• Active policies will struggle in the face of these rebalancing dynamics.
© Prof. Christian T. Lundblad
![Page 22: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/22.jpg)
Challenge #1: The U.S. Consumer
The days of excess consumption are over; where is the engine of the global economy?
This raises particular challenges for exporting nations.
Consumer-oriented U.S. and global businesses will continue to struggle.
© Prof. Christian T. Lundblad
![Page 23: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/23.jpg)
Challenge #1: Excess U.S. Consumption is Over
© Prof. Christian T. Lundblad
![Page 24: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/24.jpg)
GDP by Expenditure in the U.S. (% of GDP)
© Prof. Christian T. Lundblad
![Page 25: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/25.jpg)
Challenge #2:The Trade Imbalance
© Prof. Christian T. Lundblad
![Page 26: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/26.jpg)
© Prof. Christian T. Lundblad
Challenge #3 Fiscal AusterityThe United States
![Page 27: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/27.jpg)
Demographic Shifts
© Prof. Christian T. Lundblad
![Page 28: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/28.jpg)
Federal Reserve
Corollary to #2 and #3:Foreign Holdings of U.S. Treasuries
© Prof. Christian T. Lundblad
![Page 29: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/29.jpg)
Challenge #4:
Finally, Globalization & Inequality
© Prof. Christian T. Lundblad
![Page 30: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/30.jpg)
Income inequality in the U.S. (and globally) has unambiguously widened
Challenge #4:
Finally, Globalization & Inequality
© Prof. Christian T. Lundblad
![Page 31: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/31.jpg)
Road to Recovery…Final Thoughts
• We are slowly recovering.
• We must also acknowledge that the global economic landscape is changing. The U.S. needs to establish a sustainable balance with the rest of the world. Emerging countries, including China, must significantly re-allocate resources
• This does not call for protectionism. We need not fear the future, but it will be different.
• Households, firms, and governments need to prepare for an altered playbook.
© Prof. Christian T. Lundblad
![Page 32: Professor Christian T. Lundblad May 2013 flagler.unc.edu/faculty/lundblac/ The U.S. & Global Economy: Navigating the New Normal 2013.](https://reader033.fdocuments.net/reader033/viewer/2022051619/56649ddd5503460f94ad63be/html5/thumbnails/32.jpg)
• Partnerships & Engagement: The good news is that opportunities are plentiful (but this requires greater global engagement).
• The engine of global economic growth increasingly resides in the emerging world (but important changes are required).
• Competition…– Math & science education– Renewed commitment to technological innovation– Fostering entrepreneurial spirit and risk-taking
Road to Recovery…Final Thoughts
© Prof. Christian T. Lundblad