The U.S. Economic Growth: Steady but Still below Potential
2014; Volume: 33; Issue: 3 Linguagem: Inglês
ISSN
1930-126X
Autores Tópico(s)Financial Literacy, Pension, Retirement Analysis
ResumoPARTICIPANTS I Beacon Economics = Los Angeles, California; Conf. Board = Conference Board, New York, New York; Fannie Mae=Fannie Mae, Washington, D.C.; IFIS= IFIS Global Insight, Eddystone, Pennsylvania; GSU - EFC = Georgia State University, Economic Forecasting Center, Atlanta, Georgia; Moody's Economy = Moody's Economy.com, Westchester, Pennsylvania; Mortgage = Mortgage Bankers Association, Washington, D.C.; NAM = National Association of Manufacturers, Washington, D.C.; Northern Tr = Northern Trust Company, Chicago, Illinois; Perryman Gp = The Perryman Group, Waco, Texas; Royal Bank of Canada, Toronto, Ontario, Canada; SP UBS = UBS Bank, Salt Lake City, Utah; US Bank = U.S. Bank, Minneapolis, Minnesota; US Chamber = U.S. Chamber of Commerce, Washington, D.C.; Wells Fargo = Wells Fargo Bank, San Francisco, California.The U.S. economy is continuing its steady albeit snailpaced growth. Consensus expects this trend to continue well into 2015 with GDP growing at the rate of 2.23 percent between 2014-4Q and 2015-3Q. Gradual firming of consumer confidence and spending combined with business investment and expected growth in construction due to the demographic tailwind will continue to propel its growth. However, the growth appears to be below its potential, and there is room for improvement. A study by the Brookings Institution indicates that entrepreneurship, the engine of growth, has declined in the U.S. to at least a three-decade low in all sectors of the economy. High concentration of patents ownership in the hands of a few firms in the Silicon Valley is not helping either.CONSUMERSMark Zandi of Moody's believes that high-quality job growth combined with high stock values and a rebound in home prices should have boosted consumer spending more than what we are experiencing. Consensus data indicate that consumers remain skittish and are holding back. Data further show that household savings are at historically high levels. Households are expected to spend 91 cents out of a dollar on goods and services well into the third quarter of 2015.This is in contrast to the pre-2008 crisis when consumer spending exceeded disposable income due to easy credit. The high level of savings may be partially because of the lack of new and innovative products entering the market. The most exciting innovative products in recent years have been the hyped-up new versions of smart phones and tablets in an already saturated market.Growth in Disposable Personal Income is more than oneand-one-half times the growth in GDP for the consensus period 2014-4Q thru 2015-3Q. This is in part due to higher income from capital versus wage income as recently reported by Thomas Piketty in his book, Capital in the Twenty-First Century. Consensus data show that the expected Personal Consumption Expenditure is a solid 75 percent of the GDP, with growth rate slightly higher than one-and-one-half times the growth rate in GDP. This is good news because robust consumer spending is critical to economic growth. …
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