Peering Into A New Millennium
In the decade from 1986 to 1996, the U.S. economy grew at an average 2.3% annual rate, and employment grew 19%, adding 21 million jobs. Will the next decade see similar gains?
According to new Labor Dept. projections, the answer appears to be yes on a number of fronts. Slowing labor-force growth (1.1% a year, vs. 1.3% in the previous decade), will dampen economic growth a bit and will hold the decade's employment gains to 19 million jobs. But the department's experts see a 10% rise in the pace of productivity advances, with real output per employee growing at a 1.1% annual rate, compared with 0.9% in the prior decade.
What's more, the productivity pickup will be fueled by an acceleration in private investment. Business outlays for equipment--particularly on computers and communications technology--will shine, and nonresidential construction will stage a comeback. By 2006, gross private domestic investment is expected to account for 17.2% of gross domestic product, up from 15.3% in 1996.
Labor Dept. economists also foresee a dramatic increase in the globalization of the economy. Over the decade, exports are projected to surge from 12% to 19.7% of GDP, and imports from 13.7% to 20.5%. With exports, particularly of high-tech products, growing faster than imports, the trade deficit will contract by about 44% in real terms.
At the same time, real federal outlays for goods and services are expected to decline in both defense and nondefense areas. And while Social Security and other transfer payments by Washington will continue to rise, the experts project a balanced federal budget for the year 2006 (five years before baby boomers start to retire in force).
Looking at employment trends, the department notes that services will account for almost all the job growth. Manufacturing is expected to shed some 35,000 jobs a year, with only construction boosting employment among the goods-producing industries. State and local government payrolls will rise about 1% a year, but the federal government's job rolls will continue to shrink.
Perhaps predictably, in light of the aging population and heavy business and consumer investment in computers, many of the fastest-growing occupations are related to health care or computers.
How good are Labor Dept. projections? The agency's predictions for the 1984-95 period were surprisingly accurate in many respects, but they underprojected employment by 6.6 million jobs--mainly because the experts failed to anticipate a pickup in labor-force growth and in dual jobholders. Judging by last year's 3.2 million surge in payroll jobs, Labor's latest projections could fall short of the mark again.