The US economy continues to grow way below potential (at least I hope potential is above 1-2% a year) and remains nearly 2 million private-sector jobs short of prerecession levels. Of course, GDP and job growth were weak even before the downturn. So how about some pro-growth policies with both a short-term and long-term impact? In a new report, McKinsey sees five “game changer” opportunities for growth that could generate an additional 5.3 million jobs and $2.2 trillion in GDP growth by 2020. Here they are (along with a few relevant charts:
1. Shale-gas and -oil production. Powered by advances in horizontal drilling and hydraulic fracturing, the production of domestic shale gas and oil has grown more than 50 percent annually since 2007. The shale boom could add as much as $690 billion a year to GDP and create up to 1.7 million jobs across the economy by 2020. The impact will extend to energy-intensive manufacturing industries and beyond. The United States now has the potential to reduce net energy imports to zero—but only if it can successfully address the associated environmental risks.
2. US trade competitiveness in knowledge-intensive goods. The United States is one of the few advanced economies running a trade deficit in knowledge-intensive industries. But changing factor costs, a rebound in demand, and currency shifts are creating an opening to increase US production and exports of knowledge-intensive goods, such as automobiles, commercial airliners, medical devices, and petrochemicals. By implementing five strategies to boost competitiveness in these sectors, we believe the United States could reduce the trade deficit in knowledge-intensive industries to its 2000 level or close it—which would add up to $590 billion in annual GDP by 2020 and create up to 1.8 million new jobs.