Is there reason to hope that the U.S. economy can escape the doldrums that have hampered growth for the last five years? According to McKinsey & Company the answer is yes.
Researchers at McKinsey recently concluded a high-level analysis of economic trends and opportunities with an eye for what they call “game changers – that is, catalysts that can reignite growth and reestablish a higher potential trajectory for the American economy.”
The McKinsey report identified five key areas capable of providing that change, spurring American productivity, boosting GDP by hundreds of billions of dollars, and creating jobs in the process. The five areas are:
- Energy, particularly shale oil and gas
- International trade
- Harnessing digital information to raise productivity
- Education and investing in human capital
Each of these has the potential to boost our economy significantly – but the biggest game changer predicted by McKinsey is the one that tops their list: energy.
Consider this key finding about the potential of fully developing America’s shale energy resources:
If the United States fully realizes the opportunity, shale energy could revitalize the oil and gas industry, have downstream benefits for energy-intensive manufacturing, and send ripple effects across the economy. We estimate that it could add 2–4 percent ($380 billion–$690 billion) to annual GDP and create up to 1.7 million permanent jobs by 2020.
It’s worth noting those economic numbers are similar to the estimates issued last fall by IHS Global Insight’s report on the unconventional revolution (despite using slightly different methods).
Perhaps not surprisingly, the report identifies private-sector investment and innovation as the key ingredients for realizing these core opportunities, while policymakers have the responsibility to create the right environment for growth, as ExxonMobil Chairman and CEO Rex Tillerson has argued.
And that’s the most important takeaway from the McKinsey report: To make the enormous potential of America’s energy resources and other competitive advantages a reality, supportive, market-based government policies are crucial. Policymakers in Washington and state capitals around the country should take notice.