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Economic growth is projected to pick up in 2017 and 2018 as headwinds from past exchange rate appreciations abate and support from fiscal policy begins to appear. Consumer spending will benefit from continued, though slowing, employment gains and, as the labour market tightens, stronger wage growth.
With inflation nearing its target and unemployment edging down further, monetary policy stimulus has begun to be withdrawn gradually. As growth picks up, further interest rate rises are projected to contain inflationary pressures and reduce the risk of financial-market distortions. Reducing the size of the central bank’s balance sheet will soon become appropriate. The Administration and Congress are formulating plans to cut taxes and boost infrastructure spending. The present projection assumes no spending increase at the federal level, but a tax reform is projected, which will support consumer spending and investment in 2018.
The United States is an important participant in global value chains and foreign trade has become a more important driver of economic activity. Together with technical change, this has brought many benefits to consumers, though in certain areas job losses have contributed to persistent unemployment and poverty, while displaced workers who find new jobs may need to take a significant pay cut. In comparison with other OECD countries, the United States devotes relatively few resources to helping workers retrain or find new employment. The successful experience of some states in harnessing vocational training suggests that more can be done to improve employment opportunities.
Economic Survey of the United States (survey page)