Boston Sees New Period of Economic Austerity

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Ivan Allen College Economics Professor Thomas "Danny" Boston told CNN's Tony Harris that the U.S. is entering a new period of economic austerity that will affect large sectors of the workforce and redefine what is considered full employment.

In the interview July 2 on CNN’s Tony Harris Show, Boston was asked about the June jobs report which shows a net loss of 125,000.

“There’s not much to be excited about in this job report. The numbers just don’t look good. For growth, we need about twice the 83,000 jobs we saw added in the private sector in June.”

“In part what we’re struggling with the long term consequences of the globalization of the economy. A lot of the unemployment that we see right now would actually be there even if we did not have this financial meltdown. Major corporations, mid and small size businesses are in need of an adjustment and they’ve taken the opportunity of the financial meltdown to make the adjustment to displace millions of workers that they have no intention of bringing back on board. Most of those businesses - and I’ve interviewed many of the CEOs - they say that even when things turn around they’re still going to go with the workforce they have and supplement that with new forms of technology that can allow them to produce… so where 5% was considered full employment, we’re going to see 7% as the low end of full employment, at least for the next couple of years.”

“But, I don’t want to paint a picture of total gloom and doom. Things will turn around. One of the good things that’s happening in the economy is that we see an acceleration in the rate of productivity and in new investment, particularly in technology, and those things ultimately have spinoffs that create new jobs, but it takes time for those things to work through the economy.”

"A month, two months ago the economy was braced for a recovery that was more robust than people had predicted. Then all of a sudden at the beginning of May we seem to have run into a brick wall. We saw a precipitous decline in consumer confidence and business confidence. And a lot of this is brought on by the shocks we’ve had to the economy where the normal pattern of spending and investing doesn’t occur. One of the shocks creating a lot of uncertainty is the persistent European debt crisis. Another one is the gulf oil spill. Those things added together create a kind of pessimism in terms of outlook which is not conducive to growth."

"Long term, it’s going to be a real struggle. We are entering a new period of austerity and it’s going to affect large sectors of the workforce. One part of the President’s plan was to invest more in green technology and we have to invest in education. Those kinds of things will allow us to position the workforce for the new environment and short of that we’ll have these kinds of persistent kinds of both social and economic problems."



  • Workflow Status:Published
  • Created By:Rebecca Keane
  • Created:07/05/2010
  • Modified By:Fletcher Moore
  • Modified:10/07/2016