Sandra Pianalto Speech

Name

10/29/11

Bus 254: Macroeconomics

2b. Question 2b: (15 points) Sandra Pianalto Speech

The Federal Reserve Bank that serves Toledo, Ohio is located in Cleveland, Ohio on 150 East Fourth Street. In the speech U.S. Manufacturing and the Economic Outlook the major concern expressed was human capital. What the speaker stresses is that we need to make investments in education and training. America is falling behind in college graduation rates in 1995 we ranked 2^nd in graduation in 2008 we ranked 13^th. The state of Ohio ranks 38^th out of the 50 states in the United States in graduation rates.

 The speaker believes that investments in human capital help with productivity and the standards of living. America needs to improve its educational performance, as we continue to fall behind we will find it difficult to lure businesses and the jobs we want to the United States. Education is becoming a vital necessity for manufacturers with less blue-collar workers and more college educated employees. With productivity in the United States increasing the number of employees needed decreased.

In the last two decades manufacturing has lost 3.7 million jobs due to improved productivity. This trend has been the same across nearly all industrialized countries. The decline in manufacturing has mostly been blue-collar workers. While on the surface the decline in employees due to improved productivity seems negative, it has allowed companies to modernize by investing in new plants and equipment.

            U.S. manufacturing during the recession lost 2 million jobs. Production has had some recovery but is still below pre-recession levels. The Manufacturing sector during the recovery has had mixed results, the automotive industry as improved fairly well while manufacturing related to construction has seen almost no growth. The Japanese tsunami disrupted supply chains for the auto industry but as companies we able to repair their supply chains they were able to increase their production of autos. Even with the mixed results of manufacturing the overall growth still doesn’t come near pre-recession levels. The recovery yielded 300,000 jobs compared with a loss of 2 million during the recession.

            The speaker also outlines how consumer, business and government spending is still too low to give much momentum to the recovery. This means that most of the current unemployed in the country are due to cyclical unemployment and less structural in nature. The unfortunate reality is that many of the unemployed today remain unemployed for extended time. About half of the unemployed have been unemployed for 6 months or more. The U.S. economy has only created 2.5 million jobs since 2009. While during the same time the government has cut around 500,000 jobs.

            Manufacturing in the United States has many different challenges. The most important of them is educating citizens to be able to compete with the rest of the world. By producing skilled workers America can combat the low-wage labor of developing countries, using productivity and quality to generate sales. Manufacturing over time changes and America has to change with the times. We have done this many times before and must continue to do so. Today our challenge is education and we must rise to meet that challenge.