There is obviously some uncertainty about the near term future, but it seems clear that a series of major stimuli will eventually overcome the series of major shocks to the economy and America will begin to recover. So what will the American economy look like in 5 years time?
Assuming that major legislation is passed and a new healthcare regime is installed, and assuming that major legislation is passed and a new energy regime is installed, and assuming that no major changes are made to Social Security,
1. Employment will recover quickly--the number of Baby Boomers heading into the sunset will create large numbers of vacant positions. The unemployment rate will return to 5%. However, the underemployment rate will be surprisingly high, depending on how it is counted.
2. The American economy will get even more lopsided--Obama's plan for healthcare and energy will create opportunities for some very succesful high tech companies. I will tell you who I think the real winners will be after I rebalance my investment portfolio next week.
3. Many elderly would-be retirees will take low-level jobs to supplement their incomes. This will create competition with certain immigrant classes. The American elderly will win this competition.
4. The re-elected President Obama will be struggling as mightily to control inflation as he currently is struggling against recession. It will be close to 10%. (I've explained why in previous posts).
5. The U.S. GDP in 2014 will be roughly $15.5 trillion, and finally gathering steam.
6. The U.S. government deficit will show no signs of being tamed. Total U.S. government debt will be about 88% of GDP.
That's what the crystal ball shows on a Saturday morning.
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