United States 2016 OECD Economic Survey unleashing productivity and expanding opportunity

1. 2016 OECD ECONOMIC SURVEY
OF THE UNITED STATES
Unleashing productivity and expanding opportunity
Washington DC, 16 June 2016
www.oecd.org/eco/surveys/economic-survey-united-states.htm
@OECD
@OECDeconomy

2. Source: OECD Economic Outlook 99 Database
A stronger recovery in the US
0
2
4
6
8
10
Japan Euro Area United States
GDP growth since pre-crisis peak
Per cent, 2008Q1-2016Q1
2

3. U.S. unemployment back to pre-crisis level
0
2
4
6
8
10
12
0
2
4
6
8
10
12
2008Q1 09 10 11 12 13 14 15 16Q1
USA Japan OECD Euro Area
% %
Source: OECD Labour Force statistics.
3

4. Overall well-being is comparatively high
0
1
2
3
4
5
6
7
8
9
10
Income and wealth
Jobs and earnings
Housing
Work and life balance
Health status
Education and skillsSocial connections
Civic engagement and
governance
Environmental quality
Personal security
Subjective well-being
USA OECD
Source: OECD Better Life Index, 2016.
4

5. The gender wage gap has narrowed
0
5
10
15
20
25
30
35
40
1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014
% Gender wage gap
5

6. Labour market outcomes lag behind for some
Source: Bureau of Labor Statistics
50
52
54
56
58
60
62
64
66
68
70
50
52
54
56
58
60
62
64
66
68
70
Black or African American Asian White Hispanic or Latino ethnicity
% of civilian non
institutional population
% of civilian non
institutional population
Unemployed
Employed
6

7. Productivity has slowed
0%
1%
2%
3%
0%
1%
2%
3%
1995-2005 2005-2015 1995-2005 2005-2015
United States OECD average
Average annual %
change
Average annual %
change
Source: OECD, Analytical database and OECD calculations.
7

8. Inflation is low
• Raise policy interest rates at a pace that gradually tightens financial conditions so
as not to jeopardise the recovery and to promote a return of inflation to the Fed’s
target.
Source: OECD, Economic Outlook database; US Department of Commerce, Bureau of Economic Analysis and the US Bureau of Labor Statistics.
-2
-1
0
1
2
3
4
5
6
-2
-1
0
1
2
3
4
5
6
Feb-07
Feb-08
Feb-09
Feb-10
Feb-11
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Core PCE price index
Personal consumption deflator
CPI
2% inflation target
Y-o-Y % changes Y-o-Y % changes
8

9. Financial sector vulnerability has diminished
• Continue Dodd Frank and Basel III requirements
Note: Range of leverage and capital ratios for large and complex banks in 2015.
Sources: SNL Financial, FDIC Global Capital Index (Hoenig Report)
0
1
2
3
4
5
6
7
8
9
USA Europe Asia
0
2
4
6
8
10
12
14
16
18
20
22
USA Europe Asia
Basel III leverage ratio Tier 1 risk-based capital ratio
%%
Minimum ratio (3%) Minimum ratio (4.5%) plus capital consumption buffer (2.5%)
9

10. Public infrastructure growth has fallen off
Source: Bureau of Economic Analysis
• Boost investment in, and maintenance of, infrastructure; in particular, promote
mass transit.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
General government capital stock (excluding defense)
Y-o-Y % changes Y-o-Y % changes
10

11. Business dynamism is slowing
Source: Census Bureau
• Ensure personal bankruptcy procedures do not undermine incentives for
entrepreneurship.
• Make R&D tax credits refundable for new firms.
8
10
12
14
16
18
8
10
12
14
16
18
1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
%
Entry rate new establishments Exit rate of existing establishments
%
11

12. Patenting delays are shortening, but still long
Source: Bureau of Economic Analysis
• Continue to speed up patenting decisions in line with targets without
compromising patent quality
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Time to final decision
Months Months
12

13. Market concentration is increasing in many
industries
• Adapt antitrust policy to the new digital economy and winner-take-all outcomes.
• Continue to strengthen pro-competitive policies, including in telecoms.
Source: Census Bureau
50.0
52.5
55.0
57.5
60.0
50.0
52.5
55.0
57.5
60.0
2002-2007 2007-2012
% industries with increased share of sales by eight largest firms
13

14. Income inequality is widening
Source: OECD Income distribution and poverty dataset.
• Expand the Earned Income Tax Credit.
• Raise the minimum wage.
• Max tax expenditures less regressive.
0.3
0.32
0.34
0.36
0.38
0.4
0.42
0.30
0.32
0.34
0.36
0.38
0.40
0.42
1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Gini index, OECD definition
14

15. Gains in education performance have slowed
Source: National Assessment of Educational Progress (NAEP)
• Use federal funding for targeted programmes to reduce disparities in student
opportunities .
• Encourage States to be ambitious in lifting educational attainment.
200
225
250
275
300
200
225
250
275
300
1990 92 94 96 98 2000 02 04 06 08 10 12 14
National average
Evolution of math scores in National Assessment of Educational Progress (NAEP)
Score Score
15

16. Female labour force participation is falling
Source: OECD Labour Force statistics
• Require paid parental leave and improve access to quality childcare to help
reduce wage gaps and improve career prospects.
60
65
70
75
80
85
60
65
70
75
80
85
1990 93 96 99 2002 05 08 11 14
Germany Japan United States OECD
Prime age female participation rates
% %
16

17. Spending on active labour market
programmes is low
• Develop reskilling programmes with established effectiveness in helping
people back to work.
Source: OECD Public expenditure and participant stocks on labour market programmes dataset
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
MEX
CHL
USA
JPN
ISR
SVK
AUS
CAN
EST
GBR
NZL
KOR
CZE
SVN
ITA
POL
NOR
PRT
CHE
ESP
LUX
DEU
BEL
AUT
HUN
NLD
FRA
IRL
FIN
SWE
DNK
% of GDP % of GDP
17

18. Ex convicts face dismal employment
opportunities
• Reduce pre-screening for criminal records on employment applications
0
10
20
30
40
50
60
70
All labour force re-entries
unemployed a year later
Young men unemployed a
year after prison release
Unemployment*
%
0
5
10
15
20
25
30
No record Criminal record
Chance of callback for job interview%
18
*Early 2000s
Source: Bureau of Labor Statistics, National Institute of Justice, Hall and Schulhofer-Whol (2015)

19. The Affordable Care Act has broadened
access to healthcare
Source: Centres for Disease Control and Prevention, National Health Interview Survey
• Continue to roll out the Affordable Care Act
0
2
4
6
8
10
12
14
16
18
20
0
2
4
6
8
10
12
14
16
18
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% of population without health insurance coverage %
19

20. 0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Within 30 minutes Within 30 to 60 minutes
Jobs are difficult to access
Note: in the 46 largest Metropolitan Statistical Areas
Source: OECD calculations using estimates by Owen and Levinson (2014).
• Boost investment in, and maintenance of infrastructure; in particular,
promote mass transit.
Per cent of jobs accessible by walking or public transit
20

21. • Rebalancing the policy mix
– Weak global growth and fiscal consolidation are weighing on prospects
– Monetary policy is overburdened
– Systemic financial risks remain
• Strengthening productivity growth
– Poor state of infrastructure is holding back productivity
– Business dynamism and entrepreneurship have weakened.
– Incumbents have acquired more market power
• Making growth more inclusive and sustainable
– Children from poor families lack the opportunity to do better than their parents
– Women’s opportunities will improve further, but the pace could be faster
– Reduce social and racial inequalities
– Helping displaced workers is gaining importance
– Meeting COP21 carbon emission goals
Policy challenges
21

22. • Rebalancing the policy mix
– Boost public investment spending
– Raise policy interest rates gradually
– Continue to implement Dodd Frank
• Strengthening productivity growth
– Ensure personal bankruptcy procedures do not undermine entrepreneurship
– Adapt antitrust policy to the modern economy
– Continue to strengthen pro-competitive policies, including in telecoms
– Remove unnecessary occupational licensing requirements
• Making growth more inclusive and sustainable
– Reduce disparities in student opportunities
– Require paid parental leave and improve access to quality childcare
– Develop reskilling programmes, reduce pre-screening
– Put a price on carbon
Key recommendations
22

23. More Information…
OECD
OECD Economics
Disclaimers:
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without
prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers
and boundaries and to the name of any territory, city or area.
23
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