Federal Reserve Chairman Ben Bernanke today observed that U.S. economic growth is too slow to substantially lower the unemployment rate. Business Roundtable President John Engler has been saying the same thing.
Bernanke spoke this morning to the National Association of Business Economists's economic policy conference. From Reuters, "Bernanke says U.S. needs faster growth":
Bernanke said the recent decline in the jobless rate, which dropped to 8.3 percent in February from 9.1 percent last summer, was "somewhat out of sync" with the rather modest pace of economic growth.
"To the extent that this reversal has been complete, further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies"...
The economy grew just 1.7 percent in 2011, athough four quarter GDP growth reached 3.0.
BRT President Engler discussed economic growth and employment in a meeting with reporters on Friday, the Monitor Breakfast, prompting this entry from The Washington Examiner's Paul Bedard, "CEOs: Stagnant job, economic growth through 2012":
John Engler, president of the Business Roundtable, is warning that economic growth this year is likely to be closer to 2 percent, not the 3 percent the administration is hoping for, and that unemployment will not dip below 8 percent.
Asked what he sees the unemployment rate at on the October weekend before Election Day, Engler says that he has a “hard time thinking it will be below 8 percent.”
Engler says that to create enough jobs to turn around the economy, growth has to be closer to 3.5 percent, but his members just aren’t seeing it.
BRT Chairman Jim McNerney, CEO of Boeing, will join Engler on Wednesday to release results of the BRT's CEO Economic Outlook Survey, which gauges sentiment economic conditions for the next six months. Details.
UPDATE (2:15 p.m.): Bernanke also said that he did not believe the lack of skilled workers contributes in a signficant way to unemployment. The Globe and Mail has a full story on that angle, "Bernanke wary on claims of U.S. skills mismatch":
Mr. Bernanke just doesn’t buy it. He has pushed back against the structural unemployment argument consistently over the past couple of years, and no more forcefully than Monday at the annual conference of the National Association for Business Economics.
“Although structural shifts are no doubt important in the longer term, my reading of the research is that, at most, a modest portion of the recent sharp increase in long-term unemployment is due to persistent structural factors,” Mr. Bernanke said.
Deloitte just released a survey of employers that does not jibe with Bernanke's view. From the news release, "Widening Skills Gap Threatens Employers' Ability to Compete: Deloitte"
NEW YORK, March 14, 2012 /PRNewswire via COMTEX/ -- Ironic as it may be, despite record-high unemployment and the perception of a surplus of talent, human resources (HR) professionals may be forced to choose from limited quantities of high-skilled workers, a new Deloitte study shows. Moreover, the widening skills gap may put the country's ability to compete globally in a vulnerable position.
The 2012 Top Five Total Rewards Survey from Deloitte and the International Society of Certified Employee Benefit Specialists (ISCEBS) reveals talent as the most significant challenge to organizations over the next three years. One quarter of all survey respondents expressed concerns about talent, particularly the shortage, motivating and retaining talent -- a substantial increase over 16 percent last year. Talent shortage concerns are highest among insurance and professional services firms.
"The survey exposes a widening gap between the dwindling supply of skilled workers in America and the growing demands of the modern workplace," said David Lusk, principal, Deloitte Consulting LLP and author of the report. "A key challenge ahead for employers will be working to help close this skills gap to maintain a competitive edge in the global marketplace."