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January 2012, Vol. 135, No. 1
The U.S. economy in 2020: recovery in uncertain times
Kathryn J. Byun and Christopher Frey
Kathryn J. Byun and Christopher Frey are economistsin the Division of Industry Employment Projections, Office of Occupational Statistics and Employment Projections, Bureau of Labor Statistics. Email: email@example.com or firstname.lastname@example.org.
Real GDP is expected to grow 3.0 percent annually over the next decade, faster than the 1.6-percent-per-year growth experienced over the 2000–2010 period, but slower than the 3.4-percent growth from 1990 to 2000; recovery of the housing market, improved consumer confidence, strong business investment, rising medical expenses, and narrowing of the trade deficit also characterize the outlook.
More than two-and-a-half years after the official end of the longest and deepest recession since World War II,1 the United States is continuing to undergo a slower-than-average recovery, similar to the experience of other countries facing financial crises.2 The recovery started strong, with growth in the nation's gross domestic product (GDP) averaging 3.0 percent over the first six quarters after the official end of the recession, but slowed considerably in the first half of 2011.3 Many analysts have referred to the recovery to date as "modest" or "disappointing."4 The unemployment rate fell from a peak of 10.0 percent in late 2009 to 8.5 percent by December 2011. The slow recovery of the unemployment rate has been accompanied by a 2-percentage-point decline in the labor force participation rate since the onset of the recession. The longterm unemployed, those out of work for 27 or more weeks, account for an unprecedented share of the unemployed. Home prices, as measured by the Case-Shiller Home Price Indexes, declined by more than 30 percent from their peak in early 2006, and housing starts remain at or very near record lows.
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1 According to the National Income and Product Accounts published
by the Bureau of Economic Analysis (BEA) at the time of this
publication, the recession was the deepest in the postwar period, as
meas-ured by the decline in gross domestic product. The National Bureau
of Economic Research, the arbiter of beginning and ending dates
of U.S. recessions, has determined that the recession of 2007–2009
lasted 18 months. The 1973–1975 and 1981–1982 downturns each
lasted 16 months. (See "US Business Cycle Expansions and Contractions,"
(Cambridge, MA, National Bureau of Economic Research, Jan.
19, 2012, updated daily), http://www.nber.org/cycles/cyclesmain.html).
2 See Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ, Princeton University Press, 2009).
3 Estimates of levels cited in this article are chain-weighted measures based on constant real 2005 dollars unless stated otherwise. For a discussion of the chain-weighting methodology, see 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, http://www.bea.gov/scb/pdf/national/nipa/1997/0597od.pdf.
4 See, for example, "American Economic Policy: Running Out of Road," The Economist, June 16, 2011, http://www.economist.com/node/18834323; Andrew Tilton, "The Outlook for the U.S. Economy," white paper (New York, Goldman Sachs Asset Management, October 2011), http://www2.goldmansachs.com/gsam/docs/fundsgeneral/general_education/economic_and_market_perspectives/wp_economic_outlook.pdf; and Monetary Policy Report to the Congress, submitted pursuant to section 2B of the Federal Reserve Act (Board of Governors of the Federal Reserve System, July 13, 2011), http://federalreserve.gov/monetarypolicy/files/20110713_mprfullreport.pdf.
U.S. economy to 2018: from recession to recovery, The.—Nov. 2009.
U.S. economy to 2016: slower growth as boomers begin to retire, The.—Nov. 2007.
U.S. economy to 2014, The.—Nov. 2005.
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