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February 2004, Vol. 127, No. 2
The U.S. economy to 2012: signs of growth
Betty W. Su
Every 2 years, the Bureau of Labor Statistics prepares a set of projected U.S. economic factors that form the basis for the employment projections program. This article presents the projections of U.S. economic factors that underlie the 2002–12 employment projections. This set of aggregate economic projections presents some unique challenges. After the boom of the 1990s, the U.S. economy suffered a number of serious setbacks, including: the bursting of the technology bubble; the September 11, 2001, terrorist attacks; significant losses of stock market wealth; a stagnant job market; corporate accounting scandals; and uncertainties related to the war in Iraq.
Although the economy has had difficulty shaking off a stubborn slowdown, recent statistical data suggest that we are now poised for a more sustained recovery. During the 2000–02 period, the U.S. economy has experienced low inflation, low interest rates, strong productivity growth, and a healthy housing market. Also, both government monetary and fiscal policies have been focused on stimulating economic growth. Under the assumptions used by the Bureau in developing these projections, gross domestic product (GDP) is expected to reach $12.6 trillion in chained 1996 dollars by 2012, an increase of $3.2 trillion during the 2002–12 decade. (Also see box on page 25.) 1 This translates to an average annual rate of growth for real GDP of 3.0 percent over the period, 0.2 percentage point lower than the historical rate of 3.2 percent from 1992 to 2002. A slower growth of civilian household employment, from 1.3 percent a year during the 1992–2002 period to 1.2 percent from 2002 to 2012, is expected to result in an increase of 17.3 million employees over the latter period, still greater than the increase of 15.8 million employees over the preceding 10-year period, from 1992 to 2002. The employment projection is accompanied by an expected unemployment rate of 5.2 percent in 2012, 0.6 percentage point lower than that in 2002.
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1 In this article, discussions of GDP and its final demand components are couched in terms of real values unless otherwise noted. Real GDP and its components are stated in 1996 chain-weighted dollars. Chain weighting replaces the past practice of computing those indicators by reference to fixed base-year prices with an averaging technique. The chain-weighted methodology calculates the prices of goods and services in order to use weights that are appropriate for the specific periods or years being measured. As a result, for a particular year, the most detailed GDP components do not add up to their chain-weighted aggregates, and the chain-weighted aggregates do not add up to the chain-weighted real GDP For more details, see J. Steven Landefeld, Brent R. Moulton, and Cindy M. Vojtech, "Chained-Dollar Indexes, Issues, Tips on Their Use, and Upcoming Changes," Survey of Current Business, November 2003, pp. 8–16. It should be noted that in the Bureau of Economic Analysis’ latest released comprehensive revision of National Income and Product Accounts (NIPA’s), the reference year has been changed from 1996 to 2000 for the chain-weighted-dollar estimates. All data presented in this article are still measured on a chained-1996 dollars basis because the BLS projections presented in this issue were completed prior to the NIPA revision.
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