CBO: Americans Should Brace for Slower Growth

Blame baby boomers. And expect surprises.

A trader works on the floor of the New York Stock Exchange att the end of the trading day on February 3, 2014 in New York City.
National Journal
Add to Briefcase
Catherine Hollander
Feb. 4, 2014, 5:39 a.m.

Al­though the next few years will bring “sol­id” eco­nom­ic growth, the non­par­tis­an Con­gres­sion­al Budget Of­fice on Tues­day painted a less rosy pic­ture of the U.S. eco­nomy for the rest of the dec­ade. Blame baby boomers.

The eco­nomy is likely to grow by about 3 per­cent each year through 2017, CBO said in its latest out­look for the U.S. eco­nomy and budget over the com­ing dec­ade.

Then, growth is likely to “di­min­ish to a pace that is well be­low the av­er­age seen over the past sev­er­al dec­ades,” the of­fice said. That lower-than-av­er­age es­tim­ate primar­ily re­flects the slow­down in labor-force growth caused by baby boomers grow­ing older.

The un­em­ploy­ment rate has been stub­bornly high, and has dropped in re­cent months at least partly for the “wrong reas­ons” — people leav­ing the labor force. In Decem­ber, the most re­cent month for which data are avail­able, the un­em­ploy­ment rate was 6.7 per­cent. CBO be­lieves the un­em­ploy­ment rate is likely to re­main above 6 per­cent through late 2016.

CBO said this was a fore­cast un­usu­ally ripe for sur­prises, though, so hold on tight. “The eco­nom­ic re­cov­ery has had un­usu­al fea­tures that have been hard to pre­dict, and the path of the eco­nomy in com­ing years is also likely to be sur­pris­ing in vari­ous ways,” the re­port said. It ticked through a list of un­knowns that could de­rail their care­fully craf­ted pre­dic­tions: changes to busi­ness con­fid­ence, fisc­al policy, oth­er coun­tries’ eco­nom­ies, in­terest rates, and stock prices among them.


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.