New American Economy

In the coming years, as our country’s 76.4 million baby boomers enter their elderly years, our country’s healthcare system will face unprecedented demand, adding jobs faster than any other segment of our economy. Yet, employers are already finding that there are not enough unemployed healthcare workers to fill vacant positions, and in some rural areas, shortages are particularly acute.

For several reasons, immigrants have been a particularly important stopgap filling some of our most glaring healthcare needs. Immigrants are twice as likely as native-born to fill lesser skilled home health aide positions, but also twice as likely to fill high-skilled positions as physicians and surgeons. And because immigrants tend to be more willing to move for a job than the native-born, and there are visa provisions to encourage this, immigrants also fill doctor vacancies in some of our rural communities with the greatest need. A smarter immigration system, however, could help fill far more gaps in our healthcare system, benefiting patients.

United States: Continue to tackle macroeconomic challenges while supporting the middle class and preparing for population ageing, says OECD

12/10/2022 - After a rapid recovery from the pandemic, the U.S. economy faces significant challenges from surging inflation and slowing economic activity, according to a new OECD report.

Growth is projected to slow to 1.5% in 2022 and 0.5% in 2023 with inflation and tight financial conditions weighing on spending. Inflationary pressures – driven by strong demand, supply constraints and rising commodity prices following Russia’s war of aggression against Ukraine – have broadened, with services inflation now accelerating. Inflationary pressures may prove persistent, prompting additional monetary tightening.

Beyond managing immediate economic developments, the latest OECD Economic Survey of the United States says that preparing for the fiscal costs of an ageing population and easing financial pressures on middle-class households should be key priorities. The Survey draws attention to a polarisation in income and wealth distributions in recent years as the growth of disposable incomes of the U.S. middle class has been weak relative to that of higher and lower-income households, and a shrinking middle class has faced higher costs of living.

“Like many countries, the United States is dealing with the negative impact of lower global growth and higher inflation caused by Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine, while also still working through some of the economic implications of the pandemic,” OECD Secretary-General Mathias Cormann said, presenting the Survey in Washington. “The U.S. administration is rightly focusing on reducing income disparities and investing in infrastructure and the green transition. The flexible and innovative nature of the U.S. economy makes it well placed to tackle challenges and priorities, leveraging the structural transformations taking place.”

Middle-class households, which are key drivers of economic growth and social stability, had already been feeling the effects of rising housing, education, healthcare and childcare costs for some years. These rising costs, coupled with weak growth of incomes, have resulted in higher levels of household indebtedness. To ease some of these pressures, the Survey recommends raising public funding for childcare, widening the income eligibility for public programmes, fixing minimum federal childcare standards and establishing a consistent quality rating system across states.

Middle and low-income households should also be supported with measures to ensure they can benefit from investment in energy efficiency and are shielded from energy price hikes. As part of broader efforts to advance the transition to net zero emissions, financial support and preferential lending for weather-proofing and retro-fitting housing should be expanded to cover middle-income households while states are incentivised to update building energy standards.

Over the longer term, the United States will need to address fiscal challenges from ageing-related costs, which are set to increase by over 8% of GDP by 2060 without policy reforms, and foster efforts to strengthen the social safety net and achieve the climate transition. Stabilising the debt-to-GDP ratio will require additional tax revenue and more efficient spending in areas like health and infrastructure, where costs are high relative to other OECD countries.

In broadening the tax base, a priority should be to reduce tax distortions that erode revenues and have unwanted economic consequences. Reforms should include eliminating the mortgage interest tax deduction and phasing out the deduction of state and local taxes from federal income tax liabilities. Efforts to combat tax evasion could be strengthened by raising staffing in the U.S. tax administration closer to average OECD levels, and the additional funding announced in the recent Inflation Reduction Act is a step in the right direction.

See an Overview of the Survey with key findings and charts (this link can be included in media articles)

For further information or queries, journalists are invited to contact Catherine Bremer in the OECD Media Office or Miguel Gorman in the OECD’s Washington Centre.

Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.

Inflation Is Now America's Top Economic Concern

Between COVID-19, climate change and political division... there's a lot for us to worry about. But inflation, which recently hit a 40-year high, has quickly become one of the country's top concerns.

Nearly one in five (17%) Americans say inflation is the most important problem facing the country today, according to new Gallup poll. Inflation ranks as the top economic concern of those surveyed, and it's now the second biggest worry overall.

The country's most important problem, according to the poll, is more routinely up at the top of the list: It's "government/poor leadership," selected by 22% of people.

The survey was conducted by telephone in March and included a random sample of 1,017 adults living across the country. Respondents were able to choose multiple responses for which problem is the country's biggest.

It's been nearly four decades since inflation was so high on the list: Gallup says the current mentions of inflation as the country's most important problem are the highest the firm has recorded since 1985.

Of those surveyed, 4% said fuel prices were the most important problem, and 11% said the economy is general is the top issue. Only 3% said the main problem as of March is COVID-19/diseases, down from 20% in January.

The pollsters also asked around 700 respondents how much they worry about inflation, and 59% indicated they worried "a great deal," roughly tying with the 58% who said they worry a great deal about the economy. On this basis, inflation was also a leading public concern of the 14 issues the respondents were asked about, which ranged from crime and violence to the quality of the environment to the Social Security system.

In February, inflation hit a 40-year high with consumer prices up 7.9% from a year ago, according to data from the Bureau of Labor Statistics. Prices for gas, cars are soaring. You've likely experienced surging costs in your day-to-day life, whether at the grocery store or when getting your latest heating bill. People are even putting off large purchases like homes and vacations in hopes that prices will come down.

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Inflation worries have recently accelerated

Americans' concerns over inflation began rising last fall, according to Gallup. Rising prices registered no more than 2% of mentions in surveys about the public's concerns throughout most of 2021. That number jumped to 5% in October, and shot up from 8% in January to 17% in March.

"Inflation doesn't dominate Americans' perceptions of the most important problem facing the country today the way it did in the early 1980s," Lydia Saad, Director of U.S. Social Research at Gallup wrote in a post accompanying the survey results. "But it's more top-of-mind than it's been in over three decades and appears to be taking a toll on Americans' broader economic confidence."

Interestingly, while inflation disproportionately affects poor people, Americans at the higher end of the income spectrum are also very concerned about rising prices. The percentage worrying a great deal about inflation who earn $100,000 or more (58%) is nearly as high as the percentage who earn less than $40,000 (63%), Gallup found.

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