ND Finance Expert: State of the Union analysis

Author: Shannon Chapla

Jeffrey H. Bergstrand, one of the world’s top international/national economy experts, and a finance professor at the University of Notre Dame’s Mendoza College of Business, says, “President Obama suggested in his State of the Union speech fundamental improvements in education to help restore American workers’ competitiveness in a global economy. Aimed at the short term, a proposal to increase financial resources to community colleges and private firms to retrain workers with outdated skills can potentially increase employment by 2 million jobs over the next year, potentially reducing the unemployment rate by more than 1 percent by the end of 2012.

"To restore competitiveness in the longer term, the President proposed increased government resources to turnaround the layoffs of thousands of teachers in public education over the last three years that will hurt the U.S. work force in the future. However, such resources will require more flexibility for school districts in evaluating teachers’ classroom contributions. To me, what stood out as novel was the focus on U.S. competitiveness and the tie to the importance of improving retraining and of supporting public education.

"President Obama invited the U.S. Congress to again consider passing the extension of the payroll tax cut, first offered in September 2011, to stimulate U.S. economic activity and lower unemployment. This recommendation follows on the heels of IMF Managing Director Christine Lagarde's recent argument that the industrialized countries need to put growth policies foremost on their economic policy agendas.

“He proposed a new ‘Trade-Enforcement Unit’ to unify separate U.S. agencies to create a ‘level playing field’ in international trade for American exporters. Such an agency should facilitate small- and medium-sized U.S business in exporting U.S. products abroad.”

Read Bergstrand’s insight on the US/China trade imbalance.