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2/14/2011

The phrase “structural imbalances” has been used extensively to describe the fundamental problems plaguing the US economy; however recently, some analysts have been using the term inappropriately.  This week we’ll shed some light on this issue.

One of the main criticisms of the recent QE stimulus policy being implemented to spur growth in the US economy is that it simply is not addressing the core factors that are stifling employment growth.  The structural factors existing in the US refer to policies by some major US corporations of investing in job creation in low wage geographic regions outside the US, which is causing job destruction at home.  This home market where job destruction is taking place is many times providing a significant portion of corporate profitability.

Recently, the use of the phrase “structural imbalance” has been used to refer to the ridiculous notion that US corporations are looking to increase employment (e.g. have increased demand for workers) but they cannot find the skilled workers they need in the US labor pool.  This notion is not only inaccurate but simply despicable.  US Universities continue to educate students with leading edge skills and knowledge that provide the underpinnings to the corporate labor force.  And yes, this knowledge base includes Math, Engineering, Information Systems, Science, Management and Economics and others.  Perhaps you may inquire about this from institutions such as MIT, Harvard, Stanford and a host of others…schools where students come from around the world to acquire the skills that drive the global economy.  So when you hear CEOs utter those words that they can’t find skilled workers, perhaps they need to finish that statement by adding the words “skilled labor at wage levels that are unsustainably low for a developed economy”.

QE may be helping to drive US stocks higher in the short run, however it simply isn’t addressing one of the core problems stifling the creation of a robust and sustainable growth scenario…job destruction and a lack of investment by some corporations in the economy that is largely responsible for producing their profits.