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November, 2001, Vol. 124, No. 11
The U.S. economy to 2010Betty W. Su
The Bureau of Labor Statistics (BLS,
the Bureau) projections for the U.S.
economy during the 2000–10 decade reflect continued growth. Gross domestic product (GDP) is expected to reach $12.8 trillion in chained 1996 dollars by the end of the decade, an increase of $3.6 trillion over the period.1 Rising by an average annual rate of 3.4 percent, GDP is projected to grow faster than the 3.2-percent annual rate of growth over the preceding 10-year period, from 1990 to 2000. Slower growth of civilian household employment, from 1.3 percent a year during the 1990–2000 period to 1.1 percent from 2000 to 2010, is expected to result in an increase of 16.2 million employees over the latter period, slightly less than the increase of 16.4 million employees between 1990 and 2000. The employment projection is accompanied by an assumed unemployment rate of 4.0 percent in 2010, the same as in 2000. To best understand how these projections relate to the U.S. economy, it is helpful to examine the effects of major economic events that took place over the past four decades.
During the decade of the 1960s, labor productivity grew at an annual average rate of 2.9 percent, spurred by the aerospace program and strong defense-related demand. During the 1970s, labor productivity growth slowed to 1.8 percent annually as businesses struggled to deal with skyrocketing petroleum prices, energy shortages, sharp cutbacks in defense spending, and a deemphasis of aerospace research programs. The 1980s were marked by even slower productivity growth—1.5 percent each year over the decade—as large expenditures by businesses on computers and other technologies seemed to have no impact on the statistics and as significant corporate restructuring (downsizing, contracting out, and so forth) worked through the economy. In the early part of the 1990s, the economy moved into a recession, further muting productivity growth, but the stage was set for the longest sustained recovery in the post-World War II economy.
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1 Real GDP and its components are stated in 1996 chain-weighted dollars. Chain weighting replaces the past practice of computing those indicators by reference to fixed base-year prices with an averaging technique. The chain-weighted methodology calculates the prices of goods and services in order to use weights that are appropriate for the specific periods or years being measured. As a result, for a particular year, the most detailed GDP components do not add up to their chain-weighted aggregates, and the chain-weighted aggregates do not add up to the chain-weighted real GDP. For more details, see "Preview of the Comprehensive Revision of the National Income and Product Accounts: BEA’s New Featured Measures of Output and Prices," Survey of Current Business, July 1995, pp. 31–38; and J. Steven Landefeld and Robert P. Parker, "BEA’s Chain Indexes, Time Series, and Measures of Long-Term Economic Growth," Survey of Current Business, May 1997, pp. 58–68. In the current article, discussions of GDP and its final demand components are couched in terms of real values, unless otherwise noted. Finally, all historical National Income and Product Account data presented in this article are consistent with data published through the August 2001 issue of the Survey of Current Business.
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