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U.S. medium-term outlook "okay" : economist

05-04-2012 16:39 BJT

CHICAGO, May 3 (Xinhua) -- The U.S. economy is currently facing a slew of problems from high unemployment to a depressed housing sector, but they are still relatively manageable compared to those facing European countries, economist Austan Goolsbee said.

Goolsbee, who previously served as the chairman of the Council of Economic Advisers and a member of President Barack Obama' s cabinet, said he was relatively optimistic regarding the U.S. economy.

"Unlike Europe, where the medium-run I think is quite pessimistic, I think the medium-run for the U.S. is actually okay," Goolsbee said Thursday at an international conference for the Chicago Council on Global titled Searching for Strategies to Restore Global Economic Stability and Growth.

Goolsbee continued that the United States had a number of factors in its favor that were currently not enjoyed by countries across the Atlantic, and that although the U.S. deficit must be dealt with in time it was currently "manageable."

In contrast, European countries were already facing a higher debt to GDP level, value added taxes (VATs) of around 20 percent, income tax rates and spending significantly above U.S. levels, and in particular dramatically aging populations, the economist said.

On the current Eurozone crisis, Goolsbee commented that these will only get worse and that there was no obvious next step to take, whereas the United States could increase taxation or take on more debt relative to GDP if necessary.

However, Goolsbee leveled that the United States still had many problems it must deal with such as the depressed housing market, and that the short run would be "fairly bumpy" for the U.S. economy.

One particular problem Goolsbee felt the U.S. and other countries needed to address was high youth unemployment, as this could have a "long-lived negative impact" on the economy for years to come.

"To have super high youth and young adult unemployment is likely to be with us for a great deal because people' s salaries are going to be permanently lower for the next ten to fifteen years. You don' t recover for a long time," Goolsbee cautioned.

According to a recent Northeastern University analysis of the 2011 current population survey, one in two recent U.S. college graduates are currently either without work or underemployed.

The U.S. unemployment rate as a whole stood at 8.2 percent in March, with the April figures due out on Friday. According to the U.S. Department of Commerce, U.S. GDP grew at a 2.2 percent annual rate in the first quarter of 2012 .

In contrast, some European countries such as Britain and Spain have now entered double dip recessions and continue to face growth concerns.

Editor:Wang Lingfei |Source: Xinhua

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