United States: Long-term challenges
Output growth has slowed from the rapid rates of recent years. House-building has declined especially sharply. But with this and other adjustments being localised and temporary, healthy growth in GDP should soon resume. Core inflation has risen, partly reflecting the flow-on of higher energy prices to other goods and services. But assuming energy prices level out, this effect will fade and inflationary pressures should subside.
With core inflation uncomfortably high, monetary policy is now mildly restrictive. There may be scope for reductions in interest rates once core inflation is on a clear downward trajectory. The federal government budget deficit has fallen but it may stay around 2% of GDP over the forecast horizon. In addition, long-term challenges of funding entitlements are becoming steadily more pressing and remain to be addressed.
| Population (000s), 2005 | 296 410 |
| Area (000 sq km) | 9 376 |
| Currency | Dollar |
| GDP (Billion USD), 2005 | 12 428.5 |
| Life expectancy at birth (Women, Men), 2003 | 80.1, 74.8 |
| Total labour force (000s), 2005 | 150 564 |
| Government type | Federal Republic |
| Indicators | % change unless otherwise indicated |
|---|
| 2006 | 2007 | 2008 |
|---|
| GDP growth | 3.3 | 2.4 | 2.7 |
| Household savings ratio | -0.2 | 0.9 | 1.7 |
| Consumer price index | 3.3 | 2.3 | 2.3 |
| Short-term interest rate (%) | 5.2 | 5.3 | 5.0 |
| Unemployment rate (%) | 4.6 | 4.8 | 5.1 |
General government financial balance
(% GDP) | -2.3 | -2.8 | -3.0 |
| Current account balance (% GDP) | -6.6 | -6.5 | -6.6 |
Source: OECD©
OECD Observer No. 258/259, December 2006
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