Economics and Finance

CSG Midwest
When the North American Free Trade Agreement took effect in 1994, it created the largest free trade area in the world at that time. By increasing trade and investment, reducing tariffs and addressing non-tariff barriers, the leaders of Canada, Mexico and the United States hoped to grow their countries’ economies and raise living standards across the continent.
“NAFTA worked, fundamentally shaping North American economic relations, driving integration between Canada and the United States’ developed economies and Mexico’s developing economy,” says Colin Robertson, vice president of the Canadian Global Affairs Institute and a former Canadian diplomat.
More trade with neighbors
In many measurable ways, NAFTA has been a major success. U.S. trade with its two neighbors has grown at a faster rate than its economic activity with the rest of the world. The value of U.S. exports to Mexico reached $231 billion last year, with Michigan ranking third among all U.S. states ($12 billion), and for the Midwest, the cross-border relationship with Canada is especially valuable. Canada serves as the largest export market for nine of the 11 states in this region (Kansas and Nebraska are the lone exceptions).
In states such as Michigan and Ohio, much of this cross-border trade centers on the automotive industry, where cars and their various parts are built via supply chains that send components across the border multiple times on their way to completion.
In fact, intermediate goods (not-yet-completed products) from Canada and Mexico accounted for half of all total imports from these countries. Free trade is essential to preserving these cross-border supply chains. According to the Canadian Embassy, trade with Canada supports close to 9 million jobs in the United States. The Mexico Institute estimates that nearly 5 million jobs in the U.S. depend on trade with Mexico.
But from the start, the three-nation agreement has failed to fully recognize how changes in North American trade would negatively affect certain workers and industries, says Christopher Wilson, deputy director of the Mexico Institute.
CSG Midwest
With a $20 million appropriation in the state’s new biennial budget, Indiana lawmakers once again affirmed their belief in a public-private partnership designed to further develop one of the state’s existing economic strengths — its life sciences industry.
“The jobs in this sector are high-paying, and the capital investments by businesses create large benefits to our economy,” says Sen. Mark Messmer, chair of the Indiana Senate Commerce and Technology Committee. The Indiana Bioscience Research Institute began four years ago with $50 million in funding. The state provided half of that start-up money, with the rest coming from the state’s universities and private firms.
The institute provides a collaborative environment for private industries and academic researchers; the state’s hope is that this public-private research results in the commercialization of new ideas, as well as advances in areas such as heart disease, diabetes and nutrition.
CSG Midwest
Eight years have now passed since the Great Recession rocked state finances, and since that time, state policymakers have had to settle for a modest recovery and still deal with a difficult fiscal environment. In a July presentation to state legislators, John Hicks, executive director of the National Association of State Budget Officers, detailed just how different — and more challenging — this period has been compared to other post-recession eras.
Since 2011, year-to-year revenue growth in the states has never reached the historic annual average of 5.5 percent, and for fiscal year 2018, the nation’s governors were recommending an increase of only 1.0 percent (and just 0.17 percent in the 11-state Midwest).
“That’s a notable item eight years into a recovery, and it isn’t because we’re cutting taxes and having to balance our budget as a result,” Hicks said during his presentation at the Midwestern Legislative Conference Annual Meeting’s Fiscal Leaders Roundtable. Instead, this slow rise in state spending reflects a “new normal” in tax collections, the result of only moderate increases in gross domestic product and, on top of that, a gap between changes in U.S. gross domestic product and the taxes being collected by states.

The number of unemployed persons per job opening fell to 1.13 in June 2017, a 10-year low and significantly lower than the July 2009 peak of 6.6. In other words, we are close to having a job opening for every person that is unemployed. In the Midwest, the number of unemployed per job opening has now dropped to less than one, the lowest of any region.

A recently released report by MForesight, America's Next Manufacturing Workforce: Promising Practices in Education & Skills Building, outlines a range of successful educational initiatives, policy interventions, and pilot programs to strengthen manufacturing careers. The report emphasizes initiatives that are effective, replicable and scalable.

CSG convened the Autonomous and Connected Vehicle Policy Academy June 12-14, 2017 in Detroit. A group of state policymakers from around the country attended the event. The academy included a June 13 panel on the Federal Automated Vehicles Policy issued in 2016 by the National Highway Traffic Safety Administration and its model state policy. Panelists included Cathie Curtis of the American Association of Motor Vehicle Administrators, Staff Sgt. Terence McDonnell of the New York State Policy traffic services section and Santa Clara University law professor Robert Peterson.

CSG convened the Autonomous and Connected Vehicle Policy Academy June 12-14, 2017 in Detroit. A group of state policymakers from around the country attended the event. The academy included a special briefing June 13 by Robert Peterson, a law professor at Santa Clara University in California, who explained how insurance and liability will change as autonomous vehicles come online.

According to the U.S. Department of Agriculture, the average married middle income ($59,200-$107,400) couple can expect to spend $233,610 on each child for food, shelter and other necessities through age 17. Child care and education will take up 16 percent of those expenditures. However, child care costs vary dramatically across the country.

In 2011, the American Association of University Women, or AAUW, published The Simple Truth about the Gender Pay Gap, a comprehensive report on the state of the gender pay gap in the U.S. which is updated as new data is made available through the U.S. Census Bureau and the U.S. Bureau of Labor Statistics. Released this spring, the most recent edition reports that in 2015 women working full time in the United States were paid 80 percent of what men were paid.

With traditional four-year colleges driving student loan debt up to a record high of $1.3 trillion and a purported “middle skills” gap, the Trump administration’s new executive order promotes paid apprenticeship programs so students can earn while they learn. Middle skills are trades like plumbing and welding that aren’t taught in four-year colleges or high school.

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