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The economic recovery that began in 2009 should continue at a slow but steady rate through 2013, but this growth will come with challenges, the president and CEO of the Federal Reserve Bank of Philadelphia said Tuesday.
Charles Plosser, former dean and professor at the University of Rochester’s Simon School of Business, addressed close to 300 people at the University of Rochester’s 34th Annual Economic Seminar. The event was sponsored by the Simon School, JPMorgan Chase & Co. and the Rochester Business Alliance Inc.
During the address, Plosser noted the economic growth has come in “fits and starts” in the last three and one-half years. Overall growth also has been slower than expected, he added.
“There general path has continued to be forward, but we’ve made far slower progress than anyone would have liked,” he said. “A year ago, many economists were forecasting that economic growth would be closer to 3 percent for 2012. Instead, when year-end data are released later this month, we are likely to see that growth in 2012 was near 2 percent.”
The recovery has faced a challenge in the modest number of net jobs added to the economy, Plosser said. As the recovery moves forward, there will be changes necessary in the skills of the workforce to meet the new economy.
“The labor force needs to be at least partially retooled to match the skills employers demand,” he said. “Even within sectors such as manufacturing, the skills of the workers now being hired are different from those who were let go.
“Employers are seeking generally higher skilled workers who are more technology savvy, and thus better able to deliver the increases in efficiency that firms have sought to achieve.”
Plosser noted the shocks the nation experienced are likely to have an impact on the economy for some time, and the level of output reduced during the recession may never be fully recovered. But the long-term effects will depend on the nation’s response, and policy choices will matter, he said.
“Establishing training programs, investing in education and adopting immigration reforms can increase the quality of our work force and enhance future productivity growth,” he said. “But policies that reduce labor and capital mobility could harm longer-term growth.”
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