3 Possible Future US Economic Scenarios Highlighted By Dallas Fed Bank Economists

Economists at the Federal Reserve Bank Of Dallas highlight three general scenarios that the US economy could follow in these unusually uncertain economic times.

From "Oh, the Places We’ll Go: Three Scenarios for Economic Trajectory" by Tyler Atkinson and David Luttrell:

The recent recession proved to be one of the largest setbacks to U.S. output and the largest contraction in employment in the post–World War II era. After starting strong, the subsequent recovery has begun to show signs of slowing down, with second quarter 2010 real gross domestic product (GDP) growing at a revised 1.6 percent annualized rate. While the recovery has exhibited an overall growth rate that would be acceptable during normal periods of growth in the business cycle, one would expect more robust growth at the current phase of recovery given the magnitude of the recession. In fact, stronger growth is required if the U.S. economy is to return to its prerecession path of output growth (Chart 1).

While the economic outlook is unusually uncertain, there are three general scenarios that the economy could follow.

Read the Atkinson and Lutrell's complete article about the trajectory of US growth here.

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CBO Elmendorf: Presentation to Macroeconomic Advisers: Fiscal Policy Choices in Uncertain Times

From CBO Director Doug Elmendorf's presentation to Macroeconomic Advisers, "Fiscal Policy Choices in Uncertain Times" on September 16, 2010:

• The economic recovery will probably proceed at a modest pace—leaving total output well below its sustainable level, and the unemployment rate well above its sustainable level, for a number of years.


• In CBO’s judgment, the available monetary and fiscal tools, if applied at sufficient scale, would improve economic conditions during the next few years—though with costs and risks in the medium and long term. Policymakers need to address those trade-offs.


• To avoid worsening the medium-term and long-term imbalance between federal spending and revenue, any policies that widened budget deficits in the near term would need to be accompanied by specific polices to reduce spending or increase revenue over time.

Read the CBO director's complete presentation here or below.
Elmendorf Fiscal Policy Choices in Uncertain Times

Elmendorf Fiscal Policy Choices in Uncertain Times

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