A January 2nd session on the United States economic outlook organized and moderated by Fordham University’s Professor Dominick Salvatore was one of just seven sessions chosen by the AEA to be webcast on the AEA webpage . Professor Salvatore opened the session by arguing that though the U.S. recovery is the envy of Europe and Japan (Figure 2) post-recession GDP income growth has been slower in each of the past five recessions (Figure 1). Olivier Blanchard until recently chief economist at the IMF and now Senior Fellow at the Peterson Institute shows that the Phillips curve has flattened perhaps tempting policy makers to use inflation to bring down unemployment further, but warns the relationship has become less reliable, especially with very low interest rates. Stanley Fischer, Vice Chairman of the Federal Reserve Bank Board argues that since prudential regulation remains weak expansionary monetary policy may be needed to sustain recovery. Martin Feldstein says the U.S. economy is in fine shape with near full employment and core inflation nearing the target 2%. He remains concerned however with the potential burden of public debt as rates rise and transfers to the elderly increase. Columbia Professor Joseph Stiglitz argues that rising inequality and a failure to diagnose the true causes of the 2008 recession explain the anemic recover. Stanford’s John Taylor argued the U.S. has chosen to have a weak recovery by not pursuing economic reforms that we know work including tax and trade reforms, deregulation, etc.
