Although the economy experienced a sprint in growth during the start of 2013, uncertainty over the effects of central bank policies, higher taxes and government spending remain harmful to consumer confidence, while unemployment remains fairly high compared to the pre-financial crisis days.
Nonetheless, the dynamics for a gradually accelerating US recovery are already in place. Household wealth have been boosted from rising home values and stock prices, while exports are improving on the back of a global economic recovery. The U.S. is also unlikely to fall off the much-vaunted “fiscal cliff” for an extended period of time, but any sudden changes may see the economy plunge back down.
The US economy was responsible for 18.865 percent of the world’s total GDP (PPP) in 2012. This was a 0.149 percentage point decrease as compared to 2011 and has been indicative of a downward trend that started in 1999. By 2018, the US share of the world’s total GDP (PPP) is expected to fall further to 17.681 percent.
Although the US share of the world’s total GDP (PPP) is expected to decline, this is more of a result of other countries catching up rather than the US economy itself weakening.
In 2012, the US GDP was US$15.684 trillion, which was a 4.04 percent improvement from 2011. US GDP is expected to increase by 3.53 percent in 2013, and will continue to post annual growth of between 4.75 to 5.35 percent from 2013 till 2018. By the end of 2018, the US GDP is expected to be at US$21.101 trillion.
Similarly, the US GDP per capita is expected to see modest growth between 2013 and 2018. In 2010, the US GDP per capita was the 11th highest in the world at US$49,922.11. 2013 should see it increase by 2.66 percent to US$51,248.21. By 2018, this should rise further to US$ 63,676.10.
Population in the US increased by 0.72 percent to 314.184 million people in 2012. The US’s high labour force participation rate enables it to have the third largest labour force in the world at 154.9 million.
Unemployment rates in the US almost doubled in 2009 from 5.8 percent to 9.283 percent. It climbed to 9.625 percent in 2010, but has since fallen to 8.075 percent in 2012. Unfortunately, over the next five years, unemployment is still unlikely to return to pre-financial crisis levels – 4.617 percent in 2007. In 2013, unemployment is expected to drop to 7.743 percent. By 2018, the figure will drop to 5.601 percent – the first time it will drop below 2008’s unemployment rate at the start of the crisis.
On the back of the 2008 financial crisis, the US faced its first ever period of deflation since World War II, posting a -0.324 percent change (average consumer price change) in 2009.
2010 saw inflation return at 1.64 percent and the subsequent two years saw inflation grow higher to 3.141 percent and 2.076 percent in 2011 and 2012 respectively.
In 2013, the inflation rate (average consumer price change) is expected to fall to 1.828 percent. However, inflation is expected to see increase slightly every year and reach 2.263 percent in 2018. This will go someway into returning to pre-financial crisis levels where the average inflation rate between 2000 to 2008 was 2.89 percent.