Data
- Economic data
From the Economist Intelligence Unit
Source: Country Data Despite a focus on reviving the economy, the new president, Barack Obama, should be able to push through a reform increasing the number of Americans covered by health insurance and measures to reduce greenhouse gases. However, resistance from Republicans will be fierce and his effort to promote greater bipartisanship does not seem to be yielding results. Mr Obama’s Democrats should be able to win the mid-term elections in November 2010 so that they will keep their majorities in both houses of Congress. - Economic policy is now focused on containing the financial crisis and the economic downturn. A major fiscal stimulus package was approved in February, raising the federal deficit by US$787bn over the next ten years. The financial crisis will also mean that the government will have to take on more private-sector debt, and full-scale nationalisation of some banks is now quite likely. This and the direct hit from the economic downturn will lead to a dramatic deterioration in public finances in 2009-10. However, the Economist Intelligence Unit expects federal deficits to decline substantially in subsequent years and a fiscal crisis, leading to spiralling interest rates, is unlikely.
- We expect the Federal Reserve (Fed, the central bank) to keep its interest rates at 0-0.25% in 2009. It will also continue to support financial markets with ample provision of liquidity, including purchases of government bonds. An economic recovery and concerns about stimulating excessive inflation will lead to interest rate hikes from mid-2010.
- GDP will contract sharply in 2009 and growth will remain feeble in 2010 as a result of the severe weakness in the financial sector and the strains on household balance sheets. The crisis has led to a sharp deterioration in financial conditions for households and companies, a downturn in the labour market and a collapse in confidence. Even in subsequent years, the pace of economic growth will remain much weaker than during the recent boom, as it will take time for earlier imbalances to be absorbed.
- Inflation will turn negative in 2009, mainly reflecting the sharp decline in commodity prices since mid-2008. Inflation will remain low in 2010 owing to still weak economic growth. We expect the US dollar to fluctuate at around US$1.35:€1 in 2009 but to weaken moderately in subsequent years. The current-account deficit should narrow as a result of a decline in imports.
| Key indicators | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| Real GDP growth (%) | 1.1 | -3.1 | 0.7 | 1.5 | 1.9 | 2.1 |
| Consumer price inflation (av; %) | 3.8 | -1.2 | 0.7 | 1.3 | 1.6 | 1.9 |
| Federal government budget balance (% of GDP) | -3.2 | -13.7 | -15.0 | -11.0 | -6.1 | -4.9 |
| Current-account balance (% of GDP) | -4.9 | -3.1 | -2.5 | -2.0 | -1.9 | -1.5 |
| US$ 3-month commercial paper rate (av; %) | 2.1 | 0.2 | 0.7 | 2.0 | 3.5 | 4.9 |
| Exchange rate¥:US$ (av) | 103.4 | 93.8 | 91.5 | 91.0 | 90.0 | 90.0 |
| Exchange rate US$:€(av) | 1.47 | 1.35 | 1.39 | 1.42 | 1.45 | 1.47 |
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