What Is the Long-Term Economic Growth Forecast for the United States?


Quick Answer

The long-term economic forecast for the United States ranges between 1 percent and 3 percent growth of Gross Domestic Product per year. Many reputable institutions provide medium-term and long-term forecasts of GDP growth. Specifically, the Organization for Economic Cooperation and Development expects U.S. growth to decline steadily over the next 50 years toward 1 percent per year, as of 2015.

Continue Reading
Related Videos

Full Answer

Worldwide bond markets offer a highly influential secondary source of information on economic growth. Generally, the difference between short-term and long-term bond rates is taken as a reliable and simple forecaster of economic growth. Currently, short-term U.S. Treasury bond rates are slightly above 0 percent, and long-term U.S. Treasury bond rates are at 3 percent. This indicates a long-term prediction of just under 3 percent growth for the United States.

More concretely, economic growth is heavily influenced by government and technology trends over the long term. In the United States, government spending makes up 40 percent of the GDP. In European countries, this percentage is higher. An increase of U.S. government spending by 2.5 percent would have the net effect of raising the GDP by 1 percent. No other group has as much of an impact on GDP growth. As a result, long-term growth depends heavily on political behavior.

Technology is another decisive factor in economic growth. PayPal co-founder and early Facebook investor Peter Thiel has suggested that technology has only meaningfully progressed in computers over the last 40 years, while physical innovations in energy, medicine and transportation have stalled. He points to the failure to develop an alternative to oil, rapidly rising medical costs, and stagnation in transportation as instances of broader economic stagnation. Thiel suggests that technological decisions are the main drivers of economic growth in the long term.

Learn more about Economics

Related Questions