Ray Perryman is the head of the Perryman Group and a distinguished professor at the International Institute for Advanced Studies.
The Perryman Group’s most recent long-term forecast for the US economy envisages significant expansion. The situation has improved significantly since the worst of the pandemic, but the previous level of activity has not yet been reached. The uptrend should continue (although business cycles are inevitable).
For the next several years, the ongoing effects of the pandemic and efforts to slow its spread will slow progress. For example, labor shortages are currently exacerbated by COVID-related issues such as fear of contracting the virus, reluctance to comply with vaccination regulations, or related issues such as lack of childcare. While some positions will be filled as the effects of COVID-19 wear off, long-term demogr -hic trends also play a role. The US population is aging and the retirement of the baby boom generation will leave a significant void. In addition, low birth rates will further reduce the pool of available labor over time. Various responses are required to deal with the situation, including technology investment and automation, as well as sensible immigration policies.
Another challenge facing the economy as a result of COVID-19 is the ongoing problems in the supply chain. While some progress is being made, as shown by recent trade statistics, a full solution will still take some time.
Massive government spending can also affect the competitiveness and thus the growth of the economy. While there are clearly legitimate social issues that have long been neglected and underfunded and need to be addressed, the bill under consideration remains large and expensive, especially given the long-term trends in deficit financing and the need for stimulus spending during the pandemic. In addition, funding strategies allegedly (but not actually) paid for the programs would likely encourage negative dynamic responses across the economy. Dealing with climate change is also essential, but strategies need to recognize and take into account the reality of alternative energy c -acity constraints and the need to reduce emissions from essential fossil fuels.
Despite these difficulties, the prospects for expansion in the coming decades are positive. The Perryman Group’s recent long-term projections suggest that real gross product is likely to increase from an estimated $ 18.4 trillion to $ 38.1 trillion in 2020-2045, an average annual growth rate of 2.95 % is equivalent to. Employment is forecast to increase an average of 1.67% per year over the reporting period, which will result in 73.3 million net new jobs and total employment of 216.3 million by 2045. The effects of the pandemic and its aftermath will continue for years to come, the worst of the economic downturn -pears to be over. Despite the formidable challenges that need to be overcome, the US economy is expected to continue to recover and show significant growth over a longer forecast period. Stay safe!