Page 28 - MIN ECEM

BUSINESS Monday 11 SepteMber 2017
A25

Insider Q&A: Higher pay needed to support stronger growth

By JOSH BOAK Trump took a step in the
AP Economics Writer right way with a proposal
WASHINGTON (AP) — Slug- to focus on bringing in
gish pay raises have been more skilled immigrants. But
an Achilles’ heel for Ameri- then then he took a step
can workers since the backward by planning to
Great Recession ended cut down the number im-
more than eight years ago migrants being admitted.
— and a major headwind
for faster economic growth. Q: Can businesses get
As a result, many people enough access to credit?
are spending less than A: Small and medium busi-
they otherwise would. That nesses have a desire to
trend, in turn, contributes to expand, but there is still
slower overall growth in the caution on pulling the trig-
U.S. economy, because ger. So there is a lack of
consumers account for loan demand. You see the
roughly 70 percent of eco- numbers where the growth
nomic activity. in commercial loans may
Dan North, chief econ- not be strong, but you look
omist for Euler Hermes at the banker survey and
North America, part of the say, well, a lot of businesses
world’s oldest and largest aren’t really interested in
credit insurance company, getting credit yet. That’s
spoke recently with The As- This photo shows Dan North, the chief economist for Euler Hermes North America. North says kind of hampering the ex-
sociated Press about how sluggish pay raises have been an Achilles’ heel for American workers since the Great Recession pansion of credit.q
income after taxes — what ended more than eight years ago, and a major headwind for faster economic growth.
analysts call disposable (Courtesy of Euler Hermes via AP)
personal income — isn’t at 2.7 percent. As a result, Q: What would unlock Q: What role to baby
keeping pace with con- consumers have to dip into stronger income growth? boomers and millennials
sumer spending growth. their flow of savings to pay A: The low unemployment play in all of this?
for items. rate doesn’t tell the whole A: This demographics of
Q: What are the factors Without income growth, story. Our participation rate the aging workforce is re-
driving U.S. economic it’s hard for consumption — the share of people with ally tough. What’s hap-
growth right now? growth to continue. The jobs or looking for work — is pening is we have baby
A: We think for the entire big story is we don’t have quite low as well. We need boomers who are leaving
year we’re likely to see enough income. Consum- more people at work. And the workforce at a rate
GDP growth of around 2 er confidence has soared we need those people to of 10,000 every day. They
percent. But consumers since the election. But con- be earning higher wages. probably will keep doing
have a few headwinds. First sumers often say one thing You might think that the that for the next 12 years or
of all, real disposable per- and do another. To spend, low unemployment rate so. We can’t replace them
sonal income growth is in- you need the willingness would lead to higher wage fast enough, and employ-
creasing at just 1.3 percent. and ability. Consumers are growth, but it hasn’t. One ers can’t find the right peo-
That’s very slow. Consumer saying they have the will- reason is that productivity ple with the right skills to fill
spending is increasing at ingness, so it would seem. has been very weak. When those jobs.
a faster rate. If you look But that’s not enough. you have weak productiv- One way to address that
at personal consumption You’ve got to have the ity, you have weak wage is to have more skilled le-
expenditures, that’s rising ability to spend, too. growth. gal immigration. President

Average US gas price jumps after Harvey shuts refineries

CAMARILLO, Calif. (AP) — was the biggest price hike will follow. jumped 16 cents to $2.73
The average price of gaso- recorded by the Lundberg In the survey on Sept. 8, the per gallon.
line jumped in the past two Survey since 2011. average price of regular In the contiguous United
weeks after Hurricane Har- But she says whole gasoline gasoline was up 30 cents States, gas was most ex-
vey prompted the closure prices have started to de- at $2.69 per gallon. That’s pensive in San Francisco at
of refineries. cline since refineries came 48 cents higher than a year $3.21 a gallon and cheap-
Industry analyst Trilby Lun- back online and she ex- ago. est in Baton Rouge, Louisi-
dberg said Sunday that it pects prices at the pump The average price of diesel ana, at $2.31 a gallon.q