Bureau of Business Research
Date of this Version
7-2012
Citation
Business in Nebraska vol. 67, no. 704
Abstract
U.S. Macroeconomic Outlook
The U.S. economy continues to face a period of modest growth and heightened risk. Growth in manufacturing, the recent engine of domestic economic expansion, has slowed in response to a weakening global economy. More centrally, the United States continues to struggle with restructuring towards a more production-based economy. As part of this transformation, real wages continue to stagnate (and fall relative to Asian competitors), government services and the housing sector continue to be rationalized, and households face a growing need to directly pay more of the costs for their health care, retirement and education. As this restructuring continues, the U.S. economy remains vulnerable to overseas events. Such risks run high as European and Asian economies unwind from past excesses. The risk is most evident in Europe but there is also potential for a substantial slowdown in China. Chinese growth in recent years has become increasingly dependent on government directed overinvestment in both infrastructure and real estate. This government-lead economic model is no longer sustainable. The U.S. economy also faces risks in regards to fiscal policy. There is a great need for a broad-based reduction in federal government spending in the United States following rapid spending growth over the last 15 years. Significant spending cuts would greatly benefit the U.S. economy in the medium and long-run but could discourage economic growth during 2013. However, a failure to follow through on spending cuts also would discourage economic growth in 2013, by eroding confidence in the economy. The fiscal crisis therefore is likely to discourage growth during 2013, unless spending cuts are calibrated very skillfully.
Nebraska Outlook
Employment
Construction and Mining
Manufacturing
Transportation and Utilities
Wholesale Trade
Retail Trade
Information
Financial Services
Services
Government
Personal Income
Nonfarm Personal Income
Farm Income
Net Taxable Retail Sales
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Copyright 2012 by Bureau of Business Research, University of Nebraska.