An assessment of the United States economy is presented in this paper. The assessment period is 2010-2020 inclusive. The position of this writer is that the United States economy is not healthy in mid-February 2010, and that the economy will not be healthy until 2015. The principal argument within which this assessment is framed is presented in the following section.
This writer is aware that gross domestic product (GDP) growth likely will lead the National Bureau of Economic Research (Auerbach & Gale, 2009) and other organizations to declare that the economy is healthy well before 2015. A major contention of this writer, however, is that the United States economy cannot be declared to be healthy until the unemployment rate is no higher than six-percent. There are three major contributors to continuing high levels of unemployment. The major contributors are (a) weak domestic demand, (b) trade policies that reward domestic companies that shift production to other countries, and (c) a financial regulatory structure that promotes GDP growth through unproductive financial market transactions as opposed to a reliance on industrial production and non-financial services. The latter two factors have a detrimental impact on domestic demand.
Congressional Budget Office (CBO) projections for real GDP growth and the unemployment rate are summarized in Table 1. The table includes 2009 data as reference points. As the data presented in Table 1 indicate, the CBO projects modest real GDP growth in 2010 and 2011. Stronger growth in real GDP is project for 2012 through 2014, with a return to modest real GDP growth from 2015 through 2020. The unemployment rate, however, is a different story.
|Table 1: Real GDP Growth and Unemployment Rate Projections ? 2010-2020 |
|Measure |2009 |2010 |2011 ...