Economy

Slow Productivity Growth, Income Inequality Are Among Problems Facing US

On Thursday (Dec.15), the White House released its annual Economic Report of the President, which highlights what economists in the White House determined to be the toughest problems impacting economic policy.

While the report is nearly 600 pages long, The Wall Street Journal broke it down in a blog post into the top four challenges facing the country from an economic perspective. The first major problem the White House identified is a slowdown in the growth rate of productivity. According to WSJ, the average annual productivity growth rate in the U.S. is only 1.3 percent a year during the past decade ended in 2015. WSJ noted the growth rate of productivity in advanced economies has hovered at less than 1 percent during the past decade, which is around half the rate of the previous decade.

The second big problem is income inequality, with the White House data showing the share of income earned by the one-percenters has risen over the past 30 years. What’s more, the gap between the haves and have-nots in the U.S. is widening more than in other advanced economies.

Coming in third in terms of economic policy problems is low labor force participation rates. While that rate is already taking a hit as more workers who are old retire, it’s declining even among people aged 25–54.

Finally, the White House said there needs to be more economic sustainability, in which the growth the economy is seeing now isn’t at the expense of future growth. “The White House economists call for expanding so-called ‘automatic stabilizers,’ or safety-net programs, such as unemployment insurance that kick into higher gear during recessions, while taking other steps to limit the growth of spending on health care and other entitlement programs. Another area of focus here: curtailing carbon-dioxide emissions to fight the threat of climate change, an area of heavy emphasis in the broader report,” WSJ wrote in the report.

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