In a sobering speech, Philadelphia Federal Reserve President Charles Plosser, stated today that the U.S. companies are having trouble finding employees with skills in engineering, technology, and science backgrounds, thus creating a skills “mismatch” in the economy.
What’s the point? The skills mismatch is a problem for the U.S. economy and has multiple ramifications: 1) it has the potential for making U.S. corporate sector less competitive with other countries; 2) it can add to structural unemployment; 3) it can result in slower secular growth for the economy. So far, U.S. companies have been able to cope with this problem by hiring workers from overseas (under green card visa programs), and through investments in technology. To the extent the skills mismatch slows secular growth, it could mean Federal Reserve policies remain accommodative for longer than many expect and valuations for quality dividend stocks continue to rise because of the perceived benefit of rising income streams in what could become an increasingly income constrained economy.
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