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ON THE MOVE
Economic expansions don't go on forever, of course. Since 1854, the U.S.
economy has gone through 32 cycles of expansion and contraction. In modern
times, the expansions have become longer and the contractions shorter on
average: In the 10 cycles 1945-2001, expansions averaged 57 months, contractions
10 months; during all 32 cycles, by comparison, expansions averaged 38 months,
contractions 17 months.
Continually increasing productivity—output of a worker per hour—is the only
way to achieve continually increasing economic expansion and rising incomes.
Gains in U.S. productivity have been slowing down since peaking in 2002.
Middle-class U.S. workers' anxiety about job security is mounting as they
face continued technological change and competition from low-wage foreign
workers. While most economists promote unequivocally the enormous gains from
trade, a small but growing number are warning that perhaps tens of millions of
U.S. jobs could move to foreign lands and that the United States could even lose
entire industries.
Yet retreating from integration with the world economy seems almost
unthinkable. Two-way trade of At a career fair in New York City people line up
hoping to find that next economic opportunity. (© AP Images/Mark Lennihan)
goods and services represented 27 percent of U.S. GDP in 2005, up from 11
percent in 1970. The jobs of at least 12 million U.S. workers now depend on
exports.
While many U.S. workers face big challenges ahead, none more crucial than
attaining adequate education and training, optimists view the United States as
well positioned to benefit in a churning global economy because of its strong
positive record on adapting to change.
"The United States will almost inevitably be a smaller part of a growing
world economy due to the structural changes under way across the globe," the
Council on Competitiveness says. "But there is no reason why the United States
cannot retain its position as the most prosperous country in the world."
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