The Path to U.S. Economic Growth and Renewal

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The Path to U.S. Economic Growth and Renewal

Five years after the start of the global financial crisis, the longest downturn in U.S. post-war history has given way to a lackluster recovery. Deleveraging, a fragile housing market, restructuring in the financial system, and fiscal austerity have created headwinds to U.S. growth.

The national unemployment rate declined to 7.4 percent over the summer, but that improvement is largely due to the fact that labor force participation dropped from 67.3 percent in 2000 to 63.4 percent in May 2013, reaching a 34-year low.1 If young Americans are to enjoy the same increase in living standards over their lifetime as previous generations, the United States must expand employment, make its workforce more competitive, and sharply accelerate the productivity growth that is driven by innovation and high-value goods and services.

What, exactly, can be done to spur that growth? As always, the Trends editors have been diligently searching for solutions that can benefit our clients. The trend we'll examine here focuses on a portfolio of priorities that will spur productivity gains, boost GDP, and generate jobs in the near-term. Our list of candidates matches a similar list of priorities identified by the McKinsey Global Institute.2

We agree with McKinsey that the following five "game-changers" will accelerate short- and medium-term growth and lay the groundwork for sustainably building the nation's wealth over the longer term:

  • Game-changer #1: Large-scale shale gas and oil production
  • Game-changer #2: Increased trade competitiveness in knowledge-intensive manufactured goods
  • Game-changer #3: Leveraging big-data analytics to raise productivity
  • Game-changer #4: Increased investment in infrastructure, with a new emphasis on its productivity
  • Game-changer #5: Implementing a more cohesive and effective system of talent development in both K-to-12 and post-secondary education

These "game-changers" are mutually reinforcing. The first three are already rapidly unfolding and can boost demand to speed the recovery. Meanwhile, a renewed emphasis on infrastructure and workforce skills will lay the foundation for long-term growth and deliver their largest returns as we approach 2030.

Most notably, they all share a common thread: an immediate window of opportunity for substantial impact...

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