Review : Annual Economic Outlook

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John Greenwood authored an article entitled “Annual Economic Outlook 2013” which provided the following macroeconomic indices forecast for 2014 for seven (7) leading economies in the world. The speed at which developed economies can repair their balance sheets is most critical to the household and financial sectors of the US, Eurozone and UK economies. How effectively the developed economies can address the problems of government sector debt will also have a major impact on economic growth. Although emerging market economies generally have less indebtedness, their inability to decouple from developed markets undermined their growth rates in 2013 and was expected to continue to do so in 2014, (Gordon, 2014). The problem for all is that…show more content…
The United States The US economy was the first to enter recession (2007), and the first to see the effects of the housing crisis seriously impact the banking system (2008). However, thanks to strong measures to re-capitalize the banks the US banking system is now clearly on the road to recovery. US households are also making good progress in repairing their balance sheets. The prospects are for continued slow growth of personal incomes (about 3% p.a.) at a rate that exceeds inflation and therefore supports additional savings and further debt repayment. However, US growth depends on successfully navigating the so-called “fiscal cliff” – the effective increase in a range of taxes (due to the expiry of several tax cuts enacted previously) amounting to $400 billion, together with automatic spending cuts amounting to about $90 billion, for a combined total cut in the deficit of close to $500 billion in a single year, (Visser, 2014). The re-election of President Obama feared that a renewed recession would be enough to enable the two sides in the US Congress to reach some kind of compromise, although not perhaps to the extent of fully erasing the threat to the US economy. Consequently there was another year of roughly 2% GDP growth in the US in 2014. The Eurozone
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