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Macroeconomy <br />Outlook <br />Baseline Forecast (most likely): <br />Consumer spending continues to grow, and businesses add capacity in response. <br />Stronger overseas growth puts downward pressure on the dollar and increases <br />demand for US exports. With the economy near full employment, the faster GDP <br />growth creates some inflationary pressures. Annual growth is in the 2 percent <br />range but gradually falls below that level as the economy reaches capacity and <br />slow labor force growth becomes a constraining factor. <br />Slower growth (less likely): <br />Inaction on the budget and debt ceiling. dampens growth in the first two quarters <br />Meanwhile, the administration places significant restrictions on US imports, raising <br />costs and disrupting supply chains. In spite of the tax cut, businesses hold back on <br />investments to restructure their supply chains because of uncertainty about future <br />policy. GDP growth falls to less than 1.5 percent over the forecast period, and the <br />unemployment rate rises to about 6 percent. <br />14 <br /> <br />