The U.S. economy is well positioned for long-term growth. Future prosperity will depend on the ability of individuals, businesses and communities to adapt to change, which is likely to occur at an accelerating pace. Let’s take a brief look at our expectations for long-term U.S. economic performance and some of the driving factors.
Technology is dramatically shifting the way business is conducted, and the more prepared the United States is to embrace advances, the faster the economy will grow. An assessment of competitiveness by the World Economic Forum found that the U.S. is at the leading edge, which is good news for future expansion. Even so, there are areas where we could push forward (such as deployment of 5G) at a faster pace and improve future performance.
International trade is a second major aspect of growth in the decades to come. While there has been some progress on trade agreements with key trading partners, nothing has been finalized and approved by Congress. The stronger the agreements and the fewer restrictions there are on international trade, the better the U.S. economy will perform. The world is getting smaller.
Long-term demographic trends, such as the aging of the U.S. population and retirement of the large Baby Boomer generation, point to the potential for more frequent and intense labor shortages in the future. Technological advances such as automation, machine learning, digitization, and other actions to increase the productivity of existing workers will be needed; more rational immigration policy will also be required to allow for the efficient use of workers from other countries. Long-term economic performance will be affected by how successfully the United States adjusts to a changing workforce.
The Perryman Group’s latest long-term forecast calls for moderate growth, though business cycles in intervening years are likely. During the 2017 to 2045 period, real gross product is projected to expand from an estimated $16.8 trillion to $35.3 trillion, a 2.69 percent annual rate of growth. Employment is forecast to reach 212.1 million by 2045, up from 146.4 million in 2017. This 1.33 percent annual rate of growth in employment will result in the addition of some 65.6 million jobs.
Inflation is expected to remain fairly low, with consumer prices increasing at a 1.73 percent annual rate over the period. Interest rates are projected to rise gradually on a trend basis, with fluctuations likely in response to interim economic conditions and policy decisions. Income and industrial production are also forecast to see significant growth.
The United States economy is expected to see long-term expansion. How well we deal with challenges and make the most of competitive advantages will determine the pattern, but the overall outlook is decidedly positive.
Dr. M. Ray Perryman is president and chief executive officer of The Perryman Group. He writes for The Monitor’s Board of Contributors.