US Economic Forecast

By: EconomyWatch   Date: 30 June 2010

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The US economy is currently facing its greatest challenge since World War II. After its weaknesses were cruelly exposed during the recent global financial crisis, there has been a general lack of confidence in the US economy both locally and internationally.

The US economy has also found it a lot harder to recover from the 2008 financial crisis - believed to be the worst financial crisis since the Great Depression compared to previous downturns. Economic recovery has been sluggish while the average American remains shaken up by the events of 2008.

Despite this, the US remains the number one economy in the world. Recent actions by US policymakers have also been aimed at supporting economic growth and increasing American consumers’ confidence. Unfortunately, while the Congressional Budget Office (CBO) expects economic growth to remain moderate in 2011 and 2012, productivity and employment are likely to stay below the economy’s potential for a number of years at least.

US GDP Forecast

The US economy was responsible for 20.218 percent of the world’s GDP (PPP) in 2010. However, the US world GDP share has been dwindling since 1999. By 2015, the US share of the world’s total GDP (PPP) is expected to fall further to 18.361 percent. Although the US share of the world GDP (PPP) continues to decline, this is more of a result of other countries catching up rather than the US economy itself weakening.

In 2010, the US GDP was US$ 14.624 trillion, growing 3.58 percent from 2009. The US GDP is expected to increase by 3.65 percent in 2011, and will continue to grow annually between 4.40 to 4.49 percent from 2011 till 2015. By the end of 2015, the US GDP is expected to be US$18.029 trillion.

Similarly, the US GDP per capita is expected to experience modest growth between 2011 to 2015. In 2010, the US GDP per capita was the 7th highest in the world at US$ 47,131.95. In 2011, US GDP per capita will increase by 2.66 percent to US$48,387.29 - by 2015, this should rise to US$ 55,409.07.

US Unemployment Forecast

Population in the US increased by 0.96 percent to 310.282 million in 2010. Although the US population is significantly lower than India and China, the US has the highest labour force participation rate in the world with 139.396 million workers. However, the labour force has yet to recover completely from the 2008 financial crisis. Unemployment rates in the US nearly doubled in 2009 from 5.817 percent to 9.275 percent, while in 2010 increased to 9.73 percent.

In the next five years, unemployment rates are likely to improve annually, but not return to pre-financial crisis levels. By 2015, unemployment rates are expected to fall to 6.807 percent, however remain higher than 2007's four percent pre-downturn level.

US Inflation and Current Account Balance Forecast

On the back of the 2008 financial crisis, the US faced deflation for the first time since World War II, reporting a  negative 0.324 percent change (average consumer price change) in 2009. By 2010 inflation returned to 1.417 percent. Inflation rates in the US will continue to remain low in the next five years.

In 2011, the inflation rate (average consumer price change) is expected to fall to 0.958 percent. However, inflation is expected to increase every year and reach 1.859 percent in 2015. The US aims to return inflation rates to pre-financial crisis levels where the average rate between 2000 to 2008 was 2.89 percent.

Along with relatively low interest rates, the US economy has operated with a current account balance deficit since 1982. Currently, the US has the world’s largest current account deficit of US$466. 513 billion. This marked a significant decrease from 2006 (–US$802.637 billion), but was still approximately nine times higher than Spain’s, which was the second highest in the world.

The US current account balance deficit is expected to drop even further in 2011 to –US$400.426 billion, before returning to near pre-financial crisis levels at -US$601.671 billion in 2015. This suggests more net capital inflow into the US, but also a greater debt risk for the economy. 

 Read more on about the US economy, including industry information and trade statistics on EconomyWatch below.


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