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July 5, 2017

Economic Outlook: The Short and Long of It

By Laura Fortunato

The intersection of Tryon and Trade streets in Charlotte, North Carolina, is a vibrant marketplace of corporate enterprise, small-town entrepreneurism and random opportunity. Horns, sirens and construction crews create a rugged melody that is intermittently punctuated by the random voices of the passersby.

The sights and sounds were a fitting backdrop for the Charlotte Economics Cub luncheon inside the West Trade building. A cross-section of more than 60 banking, business and academic economists gathered to hear a June 29 presentation by Richmond Fed Research Director Kartik Athreya titled: “Economic Outlook: The Short and Long of It.”

Athreya’s remarks addressed several aspects of the factors at play in the economy, which included weaknesses in gross domestic production and consumer spending, slowing productivity growth and “huge” fiscal pressures. Still, Athreya said, the nation continues to experience “very steady growth.”

“The short-term economy is growing reasonably,” he said optimistically.

Athreya highlighted areas of particular strength like the labor market, relatively low unemployment rates, and the growing influence of innovative technology shaping present and future workforces. “The U.S. is remarkably agile when it comes to absorbing technological change,” Athreya said.

But, he cautioned, there are always trade-offs. Technological innovation can replace workers — and in some instances replace them with robots — but it also can generate new types of jobs, he said.

“If capital is cheap relative to labor in the long run, automation may replace unskilled workers,” Athreya explained. “If capital is not cheaper, technological advancement will produce new jobs to offset automation but could increase income inequality.”

When it comes to understanding how robots might affect our lives, Athreya left this diverse audience of thinkers with a fundamental question to ponder, “Who will own them?”

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