OTTAWA, Jan. 30, 2012 /CNW/ - The U.S. economy is expected to grow by
2.7 per cent in 2012, but even this modest gain depends on whether
governments on both sides of the Atlantic Ocean deal with their
respective debt challenges, according to The Conference Board of
Canada's U.S. Outlook-Winter 2012.
"Although this outlook sees continued growth in the American economy
this year, there are serious downside risks, given the poor track
record of politicians in Europe and the United States in addressing
their unsustainable debts," said Kip Beckman, Principal Economist.
In 2011, real U.S. gross domestic product (GDP) grew by 1.8 per cent,
bolstered in part by an anticipated gain of three per cent (annualized)
in the fourth quarter. Despite the tepid overall performance, the U.S.
economy was resilient enough to avoid falling back into a recession
while absorbing numerous high-profile blows. These shocks included
higher commodity prices, weak consumer and business confidence,
political stalemate in Washington, and effects of the ongoing European
debt crisis on global financial markets.
The Winter 2012 outlook assumes that even if Europe enters a recession, its governments
will find a way to keep the euro currency from collapsing.
The forecast also includes the assumption that the United States adopts
fiscal policies that support continued growth in the economy. Lower
payroll taxes and maintenance of unemployment insurance benefits are
two measures that would stimulate the economy in the short term.
However, Congress and the Obama Administration must reach an agreement
on these measures, otherwise the effects of tighter fiscal policy will
reduce economic growth this year.
With employment gains of 100,000 in November and 200,000 in December,
the U.S. job market showed signs of life late last year. Employment is
forecast to grow by 1.2 per cent in 2012, but the unemployment rate is
expected to remain around nine per cent through the year.
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448