PHOENIX, Ariz. -- The biggest problem facing the United States economy is the impact of high unemployment on consumer confidence and consumer spending, according to Abby Joseph Cohen, president of the Global Markets Institute and senior investment strategist at Goldman Sachs.

And that, to some degree, is masking strengths in the nation’s export prowess, which is gathering strength, and corporate profits, which should be bolstering stock prices.

But unemployment in this recession is different from in prior recessions, Cohen said at the Super Bowl of Indexing, a wealth management conference here.

Previous recessions merely had to overcome cyclical hurdles. This time, there is ‘structural change’ in unemployment to overcome as well, she said.

The evidence: How unemployment differs by level of education.

Even as the nation’s unemployment rate edged down to 8.6% in the last jobless report issued Friday, there has been little pain, relatively speaking, among Americans with a college education. Unemployment, she said, remains at roughly 4% for persons with a four-year degree.

But for individuals without that degree, unemployment now hovers in the “mid-teens and higher,” as a percentage of that slice of the work force, she said.

Men, as well, are suffering worse than women. At its worst point in the aftermath of the 2008 credit crisis, the rate of unemployment among all men hit 11%, compared to 8% for women.

And, she said, young men now are less likely to have a college degree than a decade ago, when the country was coming into and out of its dotcom bubble recession. By contrast, young women are more likely to have college degrees than a decade ago.

This is a big departure from historical patterns. In all previous decades, the United States has seen a steadily rising percentage of its youth gaining college degrees. That led the country to become, she said, “the most innovative nation on the planet,’’ as well as the most productive.

In “classic textbook” economic cycles, the United States lost 4% of its jobs from peak to trough. And regained them in two years.

After the 2001 to 2002 recession, only 2% of jobs were lost. But it took four years to get the jobs back, she said.

And, along with that, the jobs were “very different,’’ she said.

Which indicates there could be a “skills mismatch,’’ where candidates are lacking the kind of programming and technology-related abilities that are in most demand, now.

She fears that many young men opted out for construction jobs, when the housing and building industries were in their lending-fueled peaks in 2005, 2006 and 2007. But whether they forwent college because of this is “something we’ll have to explore when more data are available,’’ she said.

But what is clear is that computer and communications technology are the most thriving sectors not just of the U.S. economy at home, but in driving exports, she said.

Exports have been “phenomenally important over the last decade” to U.S. growth, she said.

In a period when annual growth in domestic output has been on average 2.5%, exports have been growing 8 to 10% a year.

Both businesses and consumers have been spending heavily on phones and computers, making technology “an area of significant vigor.’’

At home, industrial production is largely flat, when technology and telecommunications output is excluded, she said.

The nation’s markets have not been responding, though, to these “underlying fundamentals” in business spending and exports.

In the past decade, nominal GDP has growth of 45 percent, she said. “That doesn’t sound like a lost decade to me,’’ she said.

And the members of the Standard & Poor’s 500 index of top companies have grown operating profits 108% in that time. That’s more than doubling them, she noted.

Plus, the big outfits are generating 40% of their revenues from outside the United States and can shift their focus, where the best returns are.

Yet, their stocks are being priced at about 12 times their earnings, as opposed to historical rates of 18 times.

Fears about the removal of demand from European countries is a reason. She said that she expects Europe to be entering recession at the end of the year, as fallout of the debt crises affecting the euro zone.

Even so, equities in the United States are roughly 35% undervalued, she contended, using a Federal Reserve Board benchmark.

But for the value in exports and equities to be realized, the structural change in the nation’s unemployment has to be addressed.

That is “the single most important domestic consideration’’ at the present time, she said.

Here is a set of Cohen-compiled economic statistics developed for Goldman Sachs, released in October.

-- This article first appeared on Securities Technology Monitor.





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