BEYOND THE NUMBERS
Supply-Side Miracle Needed for Sustained 4-Percent Growth
My latest post for the US News & World Report Economic Intelligence blog explains why prospects for the economy attaining presidential candidate Jeb Bush’s goal of “4 percent growth as far as the eye can see” are far-fetched at best. Here’s an excerpt:
To build his case that the economy can do better, Bush was trying to make familiar points about the sub-par labor market of the past several years. He says that too many people who want to work full time can only find part-time jobs, and that labor force participation (the share of the population working or looking for work) is well below its level before the Great Recession. I agree on both counts, as would Federal Reserve Chair Janet Yellen.
Like most Republicans, however, Bush thinks “supply-side” factors like government regulation, taxes, and the safety net’s work disincentives are what’s slowed the recovery from the Great Recession. The mainstream view, in contrast, as expressed at the Fed and the Congressional Budget Office (CBO), is that we still don’t have enough aggregate demand for goods and services to fully employ everyone who wants a full-time job and to entice people who would like a job if they thought they could find one back into the labor force.