The U.S. economy is growing fast enough, and bosses are hiring at a high enough pace, that the Federal Reserve will likely raise interest rates three times this year 0.25% X 3 - versus once in each of the past two years, Patrick Harker, president of the Federal Reserve Bank of Philadelphia, told members of the Main Line Chamber of Commerce at their yearly Malvern economic-forecast breakfast this morning.
But Harker also warned economists are puzzled by how many men in their 20s, 30s and 40s have "dropped out of the labor force. Just 88% of prime-aged men are working, down from 98 percent after World War II. Among African American men around 20% aren't working or looking for jobs, he said, citing survey data.
The most important reasons for the drop aren't clear -- some of it is voluntary -- but Harker also noted that Philadelphia-area employers complain to him that many job applicants lack the skills needed for today's jobs. He called on Congress, state and local legislators to improve public education and job-training programs to include more useful tech and skills training.
Questioned by business owners, Harker said it's too soon to predict how President-elect Donald Trump's policies will shape the U.S. economy, pending more concrete proposals from the new administration.
He also reviewed the causes of lower business investment. "A host of issues" are weighing on productivity growth, including a mismatch between public education and employer needs.
"What I hear from company after company," Harker added, is a shortage of U.S.-based "technically oriented" staff. "We have to say (immigration of skilled workers) is an issue we need to address.
"If we do not have orowth in the labor force," either from increased training of U.S. Workers or immigration of foreign skilled workers, "we are not going to have growth in the economy," Harker concluded.