OECD ECONOMIC SURVEY UNITED STATES 2018 Sustaining growth and raising employment Washington D.C., 6 June 2018 http://www.oecd.org/eco/surveys/economic-survey-united-states.htm
@OECDeconomy @OECD
The expansion is continuing Trillion USD (2009 prices) 18
Real GDP
17 16 15 14 13
12
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: OECD Analytical Database.
2
Unemployment continues to fall Unemployment rates
% of the labour force United States 9 G7 OECD
7 5 3
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: OECD Analytical Database.
3
Fiscal stimulus is boosting growth % 4,5 4,0
% 4,5
Impact of US fiscal stimulus
4,0
3,5
3,5
3,0
3,0
2,5
2,5
2,0
2,0
1,5
1,5
1,0
1,0
0,5
0,5
0,0
0,0
2017
2018 United States
Source: OECD Economic Outlook 103.
2019
2017
2018
2019
G20 excluding US 4
Growth is projected to strengthen
2017
2018
2019
Gross domestic product (GDP)
2.3
2.9
2.8
Private consumption
2.8
2.5
2.2
Government consumption
0.1
2.2
4.3
Gross fixed capital formation
3.4
4.9
4.7
Exports of goods and services
3.4
4.8
4.4
Imports of goods and services
4.0
5.3
5.3
Unemployment rate Personal consumption expenditures deflator
4.3
3.9
3.6
1.7
2.2
2.2
Note: annual growth rates, with the exception of the unemployment rate, which is % of the labour force. Source: OECD Economic Outlook 103.
5
The government deficit is set to rise Federal government net saving as a % of GDP, calendar year
Source: Bureau of Economic Analysis, OECD.
6
Higher growth and spending restraint are needed to stabilise public debt Federal debt held by the public, % of GDP, fiscal years 150
Baseline
Making tax reforms permanent
Higher GDP growth and slower spending growth
150
140
140
130
130
120
120
110
110
100
100
90
90
80
80
70
70
60
60
50 2015
2020
Source: OECD calculations.
2025
2030
2035
50 2040
7
Inflation is returning to target Y-o-y % changes
6
CPI
PCE Coreยน
5 4
Inflation target
3 2 1 0 -1
2006
2008
2010
2012
2014
2016
2018
-2
1. Personal Consumption Expenditures excluding food and energy price index. Source: OECD Analytical Database.
8
Monetary policy is tightening %
United States
Euro area
Japan
%
6
6
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
Note: Policy rates are the federal effective funds rate for the United States, the main refinancing operations for the euro area and the complementarity lending facility rate for Japan. Source: OECD Analytical Database.
9
Recommendations to sustain economic growth • Implement the recently-passed corporate tax reform and make the temporary investment incentives set to expire to be permanent. • Ensure long-term sustainability by reining in spending growth, particularly by reforming entitlement programmes where appropriate. • Continue to raise interest rates at a gradual pace as long as inflation remains close to the Fed’s target and the labour market remains close to full employment. 10
Labour productivity growth has been weak after the crisis Labour productivity Average annual growth
2,5
OECD
United States
2,0 1,5 1,0 0,5
0,0
Source: OECD Analytical Database.
1997-2007
2008-2017
11
Business investment1 has begun to recover Contributions to annual real GDP growth
Contributions to annual real GDP growth
1,5
1,5
1,0
1,0
0,5
0,5
0,0
0,0
-0,5
-0,5
-1,0
-1,0
Intellectual property products
-1,5
Structures
-1,5
-2,0
Equipment
-2,0
-2,5
Private non-residential fixed investment (forecast) 2000
2002
2004
1. Private non-residential fixed investment Source: BEA and OECD calculations.
2006
2008
2010
2012
2014
2016
2018 2019
-2,5
12
Business dynamism has slowed A. Entry rates
% 12
United States
Euro area
Japan
10
10
8
8
6
6
4
4
2
2
0
2002
2004
2006
2008
2010
2012
20142015
B. Exit rates
% 12
0
United States
2002
2004
2006
Euro area
2008
2010
Japan
2012
20142015
Notes: Number of enterprise entries and exits in year t over number of active enterprises in year t. Data for the United States are estimated in 2013-15, using separate data from the US Census Bureau. The Euro Area estimates are an unweighted average of entry and exit rates in member states Source: OECD Economic Outlook, Volume 2017 Issue 2.
13
Restrictive regulations on businesses can be reduced OECD Product Market Regulation indicator Latest year available Scale 0 (least) - 6 (most restrictive)
2,8 2,4 2 1,6 1,2 0,8 0,4 0
TUR
NLD
Least restrictive
Source: OECD Product Market Regulation database.
OECD
USA
Most restrictive
14
Room to reduce obstacles to trade in services Scale from 0 (least) to 1 (the most restrictive), 2017
0,6
United States
0,5
Best OECD
0,6
Average OECD
0,5
Notes: the index includes regulatory transparency, barriers to competition, other discriminatory measures, restrictions on movement of people and restrictions on foreign entry. Source: OECD Services Trade Restrictiveness Index (STRI).
Air transport
Courier
Maritime transport
Insurance
Broadcasting
Construction
Logistics cargo-handling
Logistics customs brokerage
Commercial banking
Logistics freight forwarding
Engineering
Logistics storage and warehouse
Legal
0,0
Architecture
0
Computer
0,1 Road freight transport
0,1 Accounting
0,2
Sound recording
0,2
Motion pictures
0,3
Rail freight transport
0,3
Distribution
0,4
Telecom
0,4
15
Reducing trade barriers further could boost trade Increase in trade from multilateral tariff reductions Estimated medium-term impact of lowering tariffs in all G20 economies % 8
Real Import demand
Real Export demand
7 6 5 4 3
2 1
0
World
United States
European Union
China
Note: Scenario in which tariffs are reduced by all G20 economies to the lowest level applied by any G20 country. With the exception of food and textiles the lowest tariff rate is 0. Source: OECD METRO model simulations.
16
Trade has been an important driver of job growth U.S. employment embodied in exports and domestic demand, accumulated growth 35
Exports
35
Domestic demand
30
30
25
25
20
20
15
15
10
10
5
5
0
0
-5
-5
-10 2005
2006
2007
2008
2009
2010
2011
Note: Index of employment in export and final domestic demand sectors, 2005 = 0 Source: OECD Inter-Country Input-Output (ICIO) tables.
2012
2013
2014
-10 2015
17
Recommendations to boost productivity • Ease restrictions in services trade. • Direct state control over business enterprises is relatively high. Privatise state-owned utilities and transport authorities. • Regulatory protection for incumbents is relatively high in some markets. Remove exemptions from anti-trust law, including in the digital economy. • Technological change creates challenges for the competition authorities as large market shares may create barriers to competition. Broaden merger analysis to ensure greater competition. 18
Labour force participation not yet at pre-crisis levels Prime age participation rates OECD
% 88
USA
JPN
GBR
86 84 82
80
2006
2008
2010
2012
2014
2016
Note: OECD refers to a simple average. Prime age includes individuals between the ages of 25 and 54. Source: OECD Employment and Labour Market Statistics
2018
19
Workers receive relatively little support to find new jobs Public spending on Active labour market policies (ALMPs), Latest available date % of GDP 2.2
% of GDP 2.2
DNK
SWE
FRA
FIN
HUN
NLD
AUT
BEL
LUX
0.0
DEU
0.0
ESP
0.2
CHE
0.2
IRL
0.4
PRT
0.4
OECD
0.6
NOR
0.6
ITA
0.8
POL
0.8
CZE
1.0
KOR
1.0
SVN
1.2
CAN
1.2
AUS
1.4
SVK
1.4
CHL
1.6
ISR
1.6
LVA
1.8
JPN
1.8
USAยน
2.0
MEX
2.0
1. Includes Temporary Assistance for Needy Families (TANF) work-related activities. Other TANF expenditure (0.20% of GDP) is not included. Source: OECD Labour Market Programme Database.
20
Some young people struggle to enter the labour market 20-24 year-olds not in employment, education or training (NEET), latest available date % of 20-24 year-olds 35
% of 20-24 year-olds 35 30
25
25
20
20
15
15
10
10
5
5
0
0
ISL NLD DNK LUX JPN CHE DEU SWE NOR CZE AUS SVN NZL AUT EST BEL CAN GBR USA OECD SVK FIN HUN ISR POL LVA IRL CHL PRT FRA MEX GRC ESP ITA TUR
30
Source: OECD Education at a Glance: Transition from school to work database.
21
Labour force participation rates vary a lot across the United States
Note: Civilian noninstitutional population ages 16 and older Source: Bureau of Labor Statistics.
22
Inter-State migration has slowed Migration rate between states 1980-2017 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 1980
1990
Source: U.S. Census Bureau, Current Population Survey.
2000
2010
2017
23
Housing cost overburden % of population in the bottom quintile spending more than 40% of disposable income on rents or mortgages 70
OECD
60
United States
50 40
30 20 10 0
‌on rents (private tenants)
Source: OECD Affordable Housing Database.
...on mortgages
24
Occupational licensing adds to constraints on mobility % of employed with a certification or licence 50
50
45
45
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
Total
Private industries
Source: Bureau of Labor Statistics.
Federal
State
Local
Self-employed workers, unincorporated
0
25
Recommendations for helping workers find jobs • Promote active labour market policies, such as job placement services and support to geographic mobility. • Increase investment in infrastructure, (making use of greater private-sector financing, user fees and flexible risk-sharing arrangements). • Expand the use of apprenticeships and on-thejob training to ease the school-to-work transition.
26
Recommendations to reduce barriers to mobility • Reform the GSEs to redirect housing support to the rental market.
• Use federal money to encourage States and localities to remove zoning restrictions. • Encourage State and local governments to deregulate occupational licensing.
27
Well-being is generally high Indicators of well-being
US position in OECD country ranking (1 to 35) 20% top performers
60% middle performers
US position in OECD country ranking (1 to 35)
20% bottom performers
United States 2
1
5
16 19
19
Social connections
Education & Health status skills
15
14
14
25 28
Work & life balance
Personal security
Source: OECD Better Life Index database.
Jobs & earnings
Subjective Environmental Civic well-being quality engagement & governance
Housing
Income
28
Gains in life expectancy have stalled recently Life expectancy at birth A. Total population
B. Male population
Years
C. Female population
Years
90
90
Japan United States OECD members
85
Years 90
Japan United States OECD members
85
85
80
80
80
75
75
75
70
70
70
65
1965
1975
1985
1995
2005
2015
65
1965
Source: World Bank Development Indicators (WDI).
1975
1985
1995
Japan United States OECD members
2005
2015
65
1965
1975
1985
1995
2005
2015
29
Deaths from overdoses are rising Overdoses deaths involving opioids Per 100,000 resident population 15,0
12,5 10,0 7,5 5,0
2,5 0,0 1999
2002
Source: National Center for Health Statistics.
2005
2008
2011
2014
2016
30
Too many opioids are prescribed Daily doses per million inhabitants per day
50000 45000 40000 35000 30000
25000 20000 15000 10000 5000
0
USA
Source: National Center for Health Statistics and OECD calculations.
rest of OECD
31
Low labour force participation and high opioid use are closely connected By State, 2016 Participation rate
Participation rate
75
75
70
70
65
65
60
60
55
55
50
50 20
30
40
50
60
70
80
90
100
110
120
130
Opoid prescribing rate per 100 persons
Source: Bureau of Labor Statistics, Centers for Disease Control and Prevention.
32
Recommendations to address the opioid crisis • Adopt best practice for opioid prescriptions. • Improve access to drugs that can reverse the effects of opioid overdoses.
• Promote and expand medically assisted treatment options. • Help reintegrate into employment those who have successfully completed treatment for addiction. 33
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