United States: Bottoming out?

The US economy is going through a severe and protracted recession which is projected to bottom out later this year, as fiscal and monetary support takes hold and the housing cycle levels out. In 2010, even after a recovery gets under way, GDP growth is likely to remain weak because of the slowdown in capital accumulation, negative wealth effects and still adverse, albeit improving, financial conditions.

In this environment, a considerable degree of economic slack, especially in the labour market, is likely to persist over the projection period, bringing inflation to very low rates.

The Federal Reserve should continue to support activity by expanding the scale of its quantitative easing operations, if needed. The authorities should also go ahead with the planned measures to remove impaired securities from banks' balance sheets. While the large fiscal stimulus is needed to support domestic demand in the next several quarters, once the recovery is firmly in place fiscal sustainability should be restored by reducing the budget deficit and tackling the challenge of rising entitlement spending.

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See also www.oecd.org/us

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©OECD Observer No 274, July 2009

Economic data

GDP growth: -1.8% Q1 2020/Q4 2019
Consumer price inflation: 0.9% Apr 2020 annual
Trade (G20): -4.3% exp, -3.9% imp, Q1 2020/Q4 2019
Unemployment: 8.4% Apr 2020
Last update: 9 July 2020

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