222
United States The current economic expansion has become the longest on record but economic growth is now slowing, partly due to increased tariffs on imported goods and high trade tensions. The labour market has created many new jobs and unemployment has fallen to historically very low rates. Rising real wages and high asset prices are supporting average household income and consumption growth. On the other hand, in addition to intense trade tensions and uncertainty, the combined effects of a waning fiscal impulse, weaker growth in trading partners, and demographic pressures are weighing on confidence and activity. The Federal Reserve has acted to meet its dual employment and inflation mandate. With inflation returning to target only slowly and inflation expectations slipping, no changes to interest rates are projected, which may help meet the inflation target symmetrically. With large budget deficits and unsustainable long-run fiscal trends, the federal government has limited space to support the economy. Reducing barriers to finding jobs would help boost labour supply and productivity. The economy is slowing Investment and trade are slowing due to heightened uncertainty and weak demand from foreign markets, denting growth prospects. New trade measures implemented in September and those scheduled to be introduced in December 2019 on USD 300 billion imports from China have increased uncertainty, which is weighing on confidence, business investment and industrial production. The effect of new trade measures will also depress consumption growth and temporarily boost inflation. These effects are compounded by weak demand from trading partners.
United States 1 Job growth is slowing Thousand 450
← Nonfarm payroll employment change
Uncertainty is weighing on investment % of labour force 9.0
Y-o-y % changes 10
Index, 30D MA 160
Policy uncertainty index →
← Business investment
Unemployment rate →
375
7.5
8
140
300
6.0
6
120
225
4.5
4
100
150
3.0
2
80
75
1.5
0
60
0.0
-2
0
2014
2016
2018
2014
2016
2018
2020
40
Source: OECD Economic Outlook 106 database; US Bureau of Labor Statistics; and Refinitiv. StatLink 2 https://doi.org/10.1787/888934046057
OECD ECONOMIC OUTLOOK, VOLUME 2019 ISSUE 2: PRELIMINARY VERSION © OECD 2019