Peter Morici, Professor at the University of Maryland's Robert H. Smith School of Business and recognized expert on economic policy was the keynote speaker at the Association of Women in Metal Industries (AWMI) 2011 annual conference in Washington D.C. on Friday, September 30.
Morici began by taking an in-depth look at the Great Recession, and debunked the idea that we're seeing "depression levels of unemployment." Unemployment was over 24 percent during the Great Depression, compared to approximately 9 percent now.
He also discredited the constant talk of "new normal," explaining that "there's nothing normal" about the lack of growth in the US economy. "Americans haven't forgotten how to make things," he said. "There just isn't enough demand."
The other major problems the US is facing stem from two critical points: oil and China. China undervalues its currency substantially, and places a 35 percent subsidy on all Chinese export products. "Preferential procurement" by Chinese companies is also the reason why "solar companies in the US are going bust," and why "US steel mills aren't running at their full capacity."
The US' dependence on oil is also a concern, but "we will use fossil fuels for at least another generation." The US imports and uses approximately 10 million barrels of oil per day, he said.
Looking ahead, Morici anticipates that global economic growth will be about 2.3 percent in 2011 (1.6 percent in the US), and 2.1 percent in 2012 (1.8 percent in the US).
Morici was adamant that what the US needs right now are four things that will alleviate many of the current economic woes: currency reform regarding US-China trade; development of more domestic oil and gas production to lessen the dependence on foreign product; a value-added-tax (VAT) swap and healthcare reform that includes fewer subsidies and genuine reform policies. Employers pay 50 percent more for healthcare in the US than they do in other developed countries such as Germany, because "we have the least effective public sector in the developed world." The US simply spends too much money, Morici insisted.
Morici cautioned that there will be continued difficulties going forward for business leaders in the future, particularly because of moderate to slow GDP growth and the risk of another recession and continued challenges in the manufacturing arena.
Although Morici predicted growth of 1.5 to 2 percent in the US over the next two years, that's "if we're lucky-if we don't, we will have another recession," and unemployment will increase to as high as 15 percent.