Early this year, University of Chicago Booth School of Business professors Amir Sufi, Marianne Bertrand, and Randall S. Kroszner convened at the New York Hilton Midtown to talk about the top economic challenges facing Donald Trump, the current President of the United States. North America Business Correspondent for BBC News, Michelle Fleury moderated Economic Outlook discussion which focused on declining social mobility, economic inequality and globalization as tied to education levels, high student debt and uncertainty in the labor markets.
Key highlights included:
· Increased productivity need. In 2017, we can expect to see 3% GDP growth or less. The new normal is 1.9 to 2.4% growth. We need higher participation in the work force to increase productivity. Demographic shifts are draining Medicare and other social programs. People receiving unemployment benefits are not incentivized to find jobs quickly nor expand their searches past their local areas.
· Labor market uncertainty. There has been a decline in labor force participation, especially among men aged 25-54. This demographic is depressed and suffers low emotional well-being. Many are taking pain medication daily.
· Heightened economic anxiety. The less educated are comparing themselves to their parents (Not Wall Street) and disappointed to find that they not better off than the previous generation. Declining social mobility with crippling student debt is a major problem. Americans are wondering where the opportunities for growth are, and how technology impacted the economy. How many robots are replacing human capital?
· Leveraging global trade. The problem is policy, not redistribution. Trade can be a win-win. Free trade and globalization has helped so many out of poverty. Cultivating support for trade during challenging economic conditions is difficult, though, because losing a job is more salient than getting cheaper goods at Walmart because of trade.
Americans are struggling to survive in an extremely difficult and uncertain economic climate. Inspiring and effective leadership is necessary to guide the country towards meaningful, positive and sustainable change.