Summary
The QueERI-International model of the global economy integrates international trade effects at the industry level of detail with production and employment through an interrelated system for 72 countries comprising 90% or more of world output. Employment growth is measured at an industry level. The recovery of the American economy, when combined with the open markets leads to a continued decline in American-based manufacturing jobs.
Analysis
The QuERI model projects total growth to start to recover in 2010 growing 1.5% after deep losses in 2008 and 2009 (-2.1% and 3.9% respectively). As the economy recovers, international trade increases worldwide and imports growth is faster than export growth in this country. The result is the trade deficit that had halved from it prevous high returns to and exceeds its previous highs. As imports flood in, employment growth slows and then stagnates reaching a low of less than 1% growth for two years 2014 and 2015 before making a modest recovery in 2016. The loss of purchasing power leads to a recession or growth collapse in GDP in the model in 2014 and 2015.
The findings illustrate the debilitating impacts of shipping high paying jobs overseas while retaining lower paying employment in service based sectors. Without a fundamental change in US trade policy and in WTO agreements, there will never be a full recovery in the American economy. The hollowing out of the productive sectors of the economy may be a natural evolution of a philosophy that allows individuals to make decisions that are correct for their own well being without understanding that their long-term health really depends upon the collective will doing what is right for the whole society. Thus corporations, facing extreme price competition from lower cost products of their competitors who have moved jobs overseas but continue to depend upon American markets for sales, are forced to follow suit. The result is a self fulfilling prophecy that in the longer term all of these "self interested players" will lose or be driven out of business by a collapse of the "Golden Goose" that has fed their profits, i.e. the American consumer.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
