The United States economy will continue to improve in 2014, said Dr. Esmael Adibi, a faculty director at Chapman University.
Adibi delivered a wide-ranging talk that centered on how the nation’s economic conditions have improved since the great recession began in the fourth quarter of 2007. The talk, which was attended by several community leaders from the public and private sector, was sponsored by the Economic Resource Council.
While the economy as a whole picked up since the second quarter of 2011, job creation has still lagged, Adibi said. While average net income has surpassed peak levels prior to the recession, jobs are 2.1 percent down from the same peak, meaning that the recovery has not been felt equivalently by all income sectors.
Adibi acknowledged a large gap between top earners and the rest of America, noting that wages have stayed relatively flat through the recovery.
Job creation has stagnated for two principal reasons: the outsourcing of jobs overseas, where employers can pay a cheaper wage and employer’s ability to demand more from employees, the economics professor said during the speech. The analyst said despite widening discrepancies between income earners throughout the United States, California’s recent enactment of a nearly 13 percent tax on those that earn more than $250,000 per year will simply drive those earners to other states such as Texas, Washington or Nevada.
“You can do it on a federal level, but you can’t do it on a state level,” Adibi said.
The job loss that afflicted the entire country was particularly hard on the Golden State, where the housing industry serves as an important prop to the economy. Much like the national outlook, California jobs have not picked up commensurate to gains in the stock market and an increase in corporate profits.
Furthermore, a division in the pace of recovery has emerged along geographical lines. The split is so stark that Adibi said Californians should dispense with the conventional view of the state as divided between north and south.
Instead, the state is divided between east and west.
“If you take the 10 metropolitan areas in the west of California, the worst in terms of employment is the best in the eastern part of the state,” Adibi said in an interview following the talk.
In terms of home prices, western California has reached and in some cases exceeded pre-recession levels, whereas the eastern part of the state is still lagging behind.
In terms of the financial problems dogging both California and the United States, Adibi said both parties are right, taxes need to be increased slightly and cuts need to be made in all areas of spending, including national defense, Social Security and Medicaid. Instead, the federal government has decreased taxes and increased spending, leading to the burdensome debt problems, that while improving, still linger.
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