Cyclical Policies, Structural Imbalances and Growth of the U.S. Economy

Abstract

Recovery from the deep financial crisis and Great Recession that afflicted the United States and other advanced countries in 2008–2009 started in 2010, but growth has been slow with the rate of unemployment rising in most advanced nations. Rapid growth can only resume by undertaking painful structural reforms to increase efficiency and international competitiveness, but these would require several years to put into effect and provide results. Afterwards, growth in the United States and other advanced countries will resume, but it is likely to be slower than in previous decades because some of the most important growth factors of previous decades are now weaker. With increased tax pressure, more regulations and further extension of the welfare state, the United States is becoming more like Europe, and so it will likely to grow somewhat less than in the previous decade in the coming years.