| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy


Finfacts changes from 2015

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Global Cost of Living

Irish Tax - Income/Corporate

 

Feedback

 

Content Management by interactivetools.com.

News : US Economy Last Updated: Feb 20, 2015 - 9:38 AM


US economy will soon see best years in a decade
By Michael Hennigan, Finfacts founder and editor
Feb 3, 2015 - 2:51 AM

Email this article
 Printer friendly page

Despite an easing of growth in the fourth quarter, the White House, Congressional Budget Office (CBO) and Federal Reserve unanimously see the US economy on the cusp of the best years for the economy in a decade or more.

The Wall Street Journal says that in its latest round of economic forecasts, released Monday with the president’s budget, the White House sees the unemployment rate falling below 5% by the end of 2016, the lowest since before the recession. The White House sees growth of 3% this year and in 2016–the best back-to-back years since 2004 and 2005.

“The U.S. economy has substantial room for growth, although there are factors that could continue to limit that growth in the year ahead,” the White House report said. On the positive side, the report noted declining unemployment, support from Federal Reserve policy, and pent-up demand as consumers regain confidence after nearly seven years of economic doldrums. On the negative side, the report sees lingering effects of the credit crisis and continued weakness in European and Asian economies.

The White House forecasts growth of 3% over 2015 from the fourth quarter of 2014 to the end of 2015. That compares with 2.9% for the CBO and forecasts between 2.6% to 3% for most Fed policy makers. By 2017, the White House sees 4.9% unemployment–better than the CBO’s forecast of 5.3%–but in line with Fed forecasts of between 4.9% and 5.3%.

We reported last week that real US GDP rose an average of 3.4% per year from 1960 through 2007, according to economists at ratings agency Standard & Poor's. They said in 2010 that they expected growth to average only 2.6% over the following decade. The CBO said growth will average 2.5% in 2014-2018.

"The only function of economic forecasting is to make astrology look respectable," John Kenneth Galbraith (1908 - 2006), the renowned US (Canadian-born) based Harvard economist once said and absent the study which the Department hasn't released, it's a reasonable assumption that the economic consultancy used official data, which without familiarity with the Irish economy, are not the basis for making reliable forecasts.

The Journal also points to new research from the Federal Reserve Bank of San Francisco that offers an explanation for why the central bank keeps blundering with its growth forecasts.

The main issue is one that affects most of the economics profession, argue bank economists Kevin Lansing and Benjamin Pyle. Most forecasters believe participants in the economy act with rational expectations. “This theory, which is the dominant paradigm in macroeconomics, assumes that peoples’ forecasts exhibit no systematic bias towards optimism or pessimism,” the economists wrote. “Allowing for departures from rational expectations in economic models would be a way to more accurately capture features of real-world behavior.”

Other reasons Fed officials have been getting their forecasts wrong? The paper says they failed to identify building imbalances in the economy, of the sort that led to the Great Recession and its sub-par recovery. Also, there’s been an assumption monetary policy would work better than it did and forecasters’ “natural tendency” to make forecasts that build on the trend of past data, the paper said.

Related Articles


© Copyright 2015 by Finfacts.ie

Top of Page

US Economy
Latest Headlines
US jobs rose by 215,000 in July; Unemployment rate stable at 5.3%
US economy grew at weak pace in Q2 2015 - Worst expansion since 1945
Decoupling of per capita GDP, productivity, private employment, and median family income in America
US economy stumbles again in 2015
Income gap highest in 30 years; No inequality rise in best-paying US firms
Fed minutes raise doubts about fragility of US recovery
Senate Democrats block trade deal authority for Obama
Five firms held 25% of top US non-financial companies cash pile in 2014
US added 223,000 jobs in April; Broad jobless rate at 10.8%
Investment struggles as dividends/ share buybacks at top US firms to exceed $1tn in 2015
US economic growth plunged in Q1 2015
Why the Fed may (almost) never raise interest rates
US jobless rate falls to 5.5%; Broad rate at 11%; Participation rate at 1978 level
US added 257,000 jobs in January; Broad jobless rate at 11.3%
US economy will soon see best years in a decade
US annualised GDP slowed sharply in final quarter 2014
US budget deficit to fall to 2.6% of GDP in 2015
US added 252,000 jobs in December; Jobless rate falls to 5.6%
US adds 321,000 jobs in November; Private sector adds 10.9m jobs in 57 months of growth
US manufacturing slowed in November
US retail spending over Thanksgiving weekend fell 11%
US consumer spending weak in October; Business investment fell again
US third-quarter GDP revised up to 3.9% annualised rate
After destroying banking secrecy US helps Swiss exporters
US oil imports from OPEC cartel at 30-year low
Tax-inverted "Irish" firm Actavis agrees to buy US Botox maker Allergan
US nonfarm payroll employment rose 214,000 in October' Jobless @ 6-year low
Swiss bankers await fallout of US tax evasion acquittal
Two PMI reports give contrasting trends on US manufacturing
US GDP increased at annualised 3.5% in third quarter of 2014
US city home price growth slowed again in August; Consumer confidence rebounded in September
US new orders for manufactured durable goods fell again in September
Loans to buy US shares at record highs
Global markets slide; US industrial production best in 3 years & jobless claims in 14-year low
US federal budget deficit dips to 2.9% of GDP in fiscal year 2014
US added 248,000 jobs in September; Jobless rate falls to 5.9%
US set to become world’s leading liquid petroleum producer again
Obama issues new rules to combat tax inversions
US Securities and Exchange Commission to pay $30m award to foreign whistleblower
Typical American household income in 2013 was below the 1989 level