The U.S. job market outlook looks good for graduating seniors, former chairman of the White House Council of Economic Advisers R. Glenn Hubbard said Monday.
Hubbard spoke to students and faculty at the Storer Auditorium about his opinions on the U.S. and global economic structure and outlook.
The Columbia business school professor said the constant growth in consumer spending and large-scale business investment has been the force behind steady growth of occupational demand.
Hubbard’s positive outlook on the U.S. economy, growing at a rate of three to three-and-a-half percent, is what leads him to believe there will be an inviting job market for graduating seniors.
He said that since the large equity price declines, the technology bubble bursting and the tragedy on Sept. 11, 2001, have not sunk the U.S. because of the nature of the system.
“What it tells us that there is something amazingly resilient in the American economy,” Hubbard said. “That, I will argue, is also figured in the global economy, and that resilience is the story of economics.”
He partially attributed this resiliency to the attention paid to public policy by the Federal Reserve and the tax policies installed by President George W. Bush, whom he worked for.
The U.S. economy’s distinct fundamental change in the way it grew stood out in Hubbard’s mind as the major contributing factor in stabilizing the economy.
“What changed is a dramatic increase in productivity growth,” he said.
Hubbard said that in 2001, when President Bush asked him about the long-term growth prospects of the American economy, he predicted that the U.S. could grow about two tenths of a percentage point faster a year for a very long period of time.
He said that no one at the conference meeting, including the president, could rationalize his estimate.
“I can tell by looking around that big table that people thought I needed to get out more often,” he said. “What I meant was that every 10 years there will be $1,000 dollars extra for every man woman and child in the country. After I said that, you could hear a pin drop.”
Hubbard acknowledged that although technology has played a fairly significant role in the increase in productivity growth, it is not the sole reason for the growth. He cited that this is largely an American phenomenon.
“Our trading partners, who are highly, if not more connected to the latest technology than the U.S., have not experienced the increase of productivity that the United States has witnessed,” he said.
Hubbard said that the U.S. had an infrastructural advantage with a unique set of institutions in place to efficiently manage many of the growing pains that technological growth creates.
“The way our capital markets work, the way our labor markets work, the structure of regulation and taxation in the United States has enabled a response to technology that is like nothing else we have seen all over the world,” he said.
The issue of corporate governance was of great concern to Hubbard, who felt that the corporate scandals that transpired at the dawn of this decade were “truly alarming.”
“The market economy, and our ability to sustain the market economy depends upon the faith of the average person in the system,” Hubbard said. “I think that it is terrible when some business leaders break down that system, and they deserved to be punished.”
Larry Nolan can be contacted at l.nolan@umiami.edu.