In 2015 and beyond, the U.S. can expect an average of 2% growth per year, finds a new CIBC report.
“In decades past, the U.S. could run at 3% or even 3.5% real growth [when] at full employment,” says the report. “But evidence suggests that, in terms of the long-term growth path, two is the new three.”
The report adds the Federal Reserve “has been ratcheting down its estimate for long-term trend growth. Mid-point forecasts from 2011 still set the speed limit at 2.6%, but most recently a more conservative 2.1% has been shown.”
Even so, steady economic expansion is in the cards. The report says, “By the end of this year, the [Federal Reserve’s] estimate of full employment, [or] a 5% to 5.2% jobless rate, looks to be in sight.
“If the Fed steers a perfect track from then on, the economy will be on the glide path consistent with staying at full employment.” As a result, inflation could become an issue. Read more.