WASHINGTON – The U.S. economy has just completed the best two years of job growth since the 1990s, wages are on the rise and consumers are more confident about the economy than they’ve been in more than a decade. But the United States faced global headwinds that will continue this year, according to the latest report from the president’s Council of Economic Advisers.
The report also makes several recommendations to reduce income inequality, though many of the recommendations are heavily reliant on co-operation from a wary GOP-led Congress and state and local governments. For example, the advisers support an increase in the minimum wages, which GOP lawmakers generally oppose. They also say that the expansion of state licensure requirements has made it harder for workers to switch jobs and land-use restrictions have made housing more expensive.
The report says falling oil prices had less of an impact on economic growth than many projected, boosting gross domestic product by just 0.2 per cent last year.
Overall, the U.S. is doing better than other advanced economies, said Jason Furman, chairman of the Council of Economic Advisers. Wages grew at a rate of 2.5 per cent and the unemployment rate dropped to 5 per cent, faster than anyone expected, he said.
Yet, many economists say the recovery has been uneven and left many Americans behind. Furman agreed that more can be done.
“We are still not all the way there. We in particular would like to see faster wage growth,” Furman said.
In the midst of the presidential election, candidates have spoken often about boosting economic growth. Furman said demographics factors will make it harder to keep pace with historical rates. He said there’s a lot that government policy can do to aid growth, from making investments in early childhood education and roads, bridges and other infrastructure, and approving a trade pact with Pacific Rim countries. But the population growth is slower and the baby boom generation has turned into a retirement boom.
“Frankly, you’re going to need to do all of those just to even probably get yourself to the types of historic productivity growth we’ve had,” Furman said.