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Peering Into A New Millennium


Economic Trends

PEERING INTO A NEW MILLENNIUM

More jobs, trade, and productivity

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.BY GENE KORETZReturn to top

TABLE

America's Job Growth: The Decade Ahead

Occupations

adding the most positions: GAIN (1996-2006)

CASHIERS 530,000

SYSTEMS ANALYSTS 520,000

GENERAL MANAGERS

& TOP EXECUTIVES 467,000

REGISTERED NURSES 411,000

RETAIL SALESPERSONS 408,000

TRUCK DRIVERS 404,000

HOME HEALTH AIDES 378,000

TEACHER AIDES 370,000

TOTAL U.S. NET INCREASE 18,574,000

DATA: LABOR DEPT.

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FUZZY FIGURES ON HEALTH COSTS

Many researchers don't have a clue

The new economics of medicine has put the heat on providers to find the most cost-effective forms of care. But the research that doctors and managed-care companies use to weigh which treatments work best and cost least suffers from something approaching financial illiteracy, according to an article in the current Journal of the American Medical Assn.

A team of medical- and business-school researchers reviewed reports on 181 clinical trials that made claims about costs of treatments. These are "the gold standard for studies of clinical effectiveness" of new drugs, surgeries, or approaches to care, says lead author E. Andrew Balas of the University of Missouri School of Medicine. But while all 181 reports made cost claims, nearly half gave no actual figures on costs. Even among the 97 studies with cost data, the figures "were very vague and incomplete," says Balas: Eighty-three studies omitted startup costs, 66 didn't report on the cost of supplies, and 56 studies failed to include labor costs in their analysis.

Using such studies to cut medical costs "is almost like a blindfolded surgeon doing an amputation," Balas says. His group's prescription for the problem: Agencies that fund medical research and journals that publish should insist that researchers build financial controls and analysis into their studies before they're allowed to make any claims about a treatment's cost-effectiveness.By Mike McNamee in WashingtonReturn to top


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