Economic Forecast: How Long Until We're Back to Normal?
This is an ugly calculation. My recently updated economic forecast through 2013 shows a wide gap between actual output and potential output. That is roughly equivalent to unemployment being above normal of five percent or so.
In the last year of my forecast horizon, 2013, I predict GDP growth of 3.5 percent. If that pace of growth continued year after year (which I am not actually forecasting), how long until we’re back to normal? Actual GDP equal to potential GDP, and unemployment about five percent?
2020. That’s not an eye exam result, it’s the year we’re back to normal if GDP does not accelerate beyond the rate of my 2013 forecast.
My best estimate? GDP growth will accelerate, especially once we work through the excess housing supply. So we should get to normal much sooner than 2020. However, it’s well worth noting that current growth rates are dismal, even for relative optimists like me.
www.businomics.com
“Dr. Bill Conerly is the consultant who connects the dots between the economy and business decisions. He holds a Ph.D. in economics from Duke University and was formerly Senior Vice President at First Interstate Bank.
Dr. Conerly is author of Businomics: From the Headlines to Your Bottomline—How to Profit in Any Economic Cycle (http://www.businomics.com/), which provides business leaders with a framework for understanding current economic news. He is co-author of Thinking Economics, a multi-media high school economics curriculum used in 24 states.”
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I don’t think we’re going to have any recovery unless and until Obama’s massive new regulations are repealed and Obamacare is rolled back. Companies are afraid to hire because they don’t know the true cost of hiring employees. 400,000 people are losing their jobs every week, very few new jobs are being created, and the media still tells us with a straight face that there won’t be a double dip recession.