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November 1997, Vol. 120,
The U.S. economy to 2006
- At first glance, the BLS projection of
the aggregate U.S. economy for the 19962006 period
may appear placid, as moderating growth in the labor
force constrains economic performance. Real gross
domestic product (GDP) is projected to grow at the rate
of 2.1 percent per year over the projection period and
will reach approximately $8.5 trillion by 2006 in chained
(1992) dollars.1 (See table 1.) By comparison, GDP
grew at an average annual rate of 2.3 percent during
198696.2 Nevertheless, the temperate
pace of overall economic growth belies activity occurring
below the surface.
- Over the next 10 years,
certain sectors of the economy will undergo dramatic
growth, while others will recede in importance.
Reflecting increased globalization of the economy, the
foreign trade sector will continue to be the fastest
growing component of real GDP. Exports are projected to
grow almost 3½ times faster than GDP, while imports are
expected to rise at almost 3 times the rate of GDP. By
2006, the levels of exports and imports will each
approach 20 percent of GDP.
- Besides foreign trade,
gross private domestic investment (or, simply, private
investment) will also assume a more substantial position
in the economy over the 19962006 period. Private
investment is projected to increase at a rate 1½ times
faster than the rate for GDP. Underlying the growth in
foreign trade and private investment will be an expanding
commerce in high technology and computer- related
products. Accordingly, the BLS projection anticipates
that new markets and new products will be important
features of the economy over the next 10 years.
- While some sectors of
the economy are expected to advance, others will decline
in relative importance over the projection
periodmost notably, the Federal Government. As it
has in the recent past, real defense spending
(consumption and gross investment) is projected to
decline from 1996 to 2006.3 However, the projection for Federal
non-defense spending shows a reversal from recent trends.
Unlike the growth rate of 2.0 percent per year posted for
198696, nondefense spending is expected to decline
0.8 percent per year from 1996 to 2006. In effect,
Federal expenditures will be pressed by efforts to
control the Federal deficit in the face of continued
growth of transfer payments.
This excerpt is from an article published in
the November 1997 issue of the Monthly Labor Review. The
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GDP and its components are stated in 1992 chain-weighted
dollars. Chain weighting replaces with an averaging
technique the past practice of computing real GDP and its
components by reference to fixed base-year prices. The
averaging technique employs price weights from more than
one year. As a result, for a particular year, the
chain-weighted components of real GDP generally will not
add up to the aggregate chain-weighted real GDP, and
there will be a residual. For more details, see
"Preview of the Comprehensive Revision of the
National Income Accounts: BEAs New Featured
Measures of Output and Prices," Survey of Current
July 1995, pp. 3338.
- 2 Data
for 1996 are preliminary.
- 3 The
National Income and Product Accounts now recognize
government expenditures on equipment and structures as
investment. Accordingly, government purchases are now
divided into consumption expenditures and gross
investment. This treats government purchases of fixed
assets in a manner more symmetric to the treatment of
such assets acquired by private business firms. For more
details, see "Preview of the Comprehensive Revision
of the National Income Accounts: Recognition of
Government Investment and Incorporation of a New
Methodology for Calculating Depreciation," Survey of Current
September 1995, pp. 3341.
Related BLS programs
- Related Monthly
Labor Review articles
American work force, 1992-2005. A
special issue. November 1993.
- Historical trends, 1950-92, and current
- The U.S. economy to 2005: framework for
- Another look at the labor force.
- Industry output and unemployment.
- Occupational employment: wide variations
- BLS projections to 2005-A special issue.
- Appendix: Employment projections
- Industry output and employment projections
- Occupational employment to 2005.
- Summary of BLS projections to 2005.
- The U.S. economy to 2005.
- The 2005 labor force: growing, but slowly.
(Errata: 1996 Mar. 38.)
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