US Economic Forecast, July 2009
The US economy has been hit hard by its worst downturn since World War II. Since late 2008 the economy registered record GDP declines and increases in unemployment. As a result, the US economy (real GDP) grew by only 1.1% in 2008. US real GDP dropped -2.7% in the third quarter of 2008, -5.4% in the fourth quarter of 2008, and -6.4% in the first quarter of 2009. With the economy slipping deeper and deeper into recession the government approved in February of 2009 a new fiscal stimulus package of US$787 billion, which will increase considerably the federal deficit. EIU predicts in its July forecast that the US economy will end 2009 with a total decline in real GDP of 2.6%, and grow slowly thereafter. In particular, the US economy is predicted to return to growth in 2010 with a real GDP increase of 1.4%. Real GDP growth is predicted to slow to 0.8% in 2011 and return to 1.4% in 2012. EIU predicts that the US economic growth will accelerate to 1.9% in 2013. In terms of the consumer price index, the EIU US economic forecast predicts that it will decline in 2009 registering negative inflation of 0.8%, but return to a rising path in 2010 with an increase of 0.9%. In 2011 and 2012 inflation is expected to average 1.3% and 1.6%, respectively. The EIU US economic forecast predicts also that interest rates will start rising after 2010 when economic recovery will be clearly under way. Thus for 2009 and 2010 the 3-month commercial paper rate is predicted to stay at 0.2% and 0.3%, respectively. In 2011 and in 2012 is predicted to gradually rise to 1.3% and 1.6%, respectively. You can read the full EIU forecast here.
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