A Mixed Economic View
Having detailed the potential drag on consumer spending from the end of the payroll tax cut, one might wonder about the performance of the overall economy. The Chicago Fed released the results of its most recent Economic Outlook Symposium (PDF) on Thursday, summarizing the economists' views for 2013. The consensus is for the economy to continue growing moderately, roughly in line with its long-term potential. (Recall that potential GDP growth is determined by growth of the labor force plus productivity gains, which works out to about 2.5%.) The economy needs to grow faster than this to bring down unemployment significantly.
But with the economists' forecast of 2.3% growth in GDP in 2013, even though it's a bit better than 2012's projected 1.7% increase, job growth may only keep up with population growth. We might not be able to put the 12.2 million people who are officially unemployed back to work, plus the 1.1 million people who have given up their job search but still want a job. That means that the economists expect unemployment at the end of 2013 to be 7.6% -- not much different from the current 7.8%....554 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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