National Economy over the Next Decade Essay

Beyond 2007, the tempo of economic maturement allow for probably slow somewhat. The main conclude is that the labor force is projected to grow less quickly as members of the baby-boom generation begin to retire and as the scheduled expiration of dissimilar tax provisions in 2011 discourages work by raising fringy tax targets. Real GDP is projected to grow at an mean(a) yearly rate of 3. 1 pct between 2008 and 2011 and at 2. 6 per centum between 2012 and 2016. The rate of inflation is assumed to average 2.2 percent after 2007 and the unemployment rate, 5. 2 percent. Interest rates on three-month and 10-year treasury securities are projected to average 4. 4 percent and 5. 2 percent, respectively (Marron 6). Over the longer term, the aging of the U. S. population combined with rapidly emergent health guardianship costs will put significant strains on the federal budget, which begin to be evident within the projection period. When the scratch line members of the baby-boom g eneration reach age 62 in 2008, they will fabricate eligible for Social Security benefits.As a result, the annual rate of gain of Social Security expending is expected to increase from rough 4. 8 percent in 2008 to 6. 5 percent in 2016. In addition, because the cost of health care is likely to continue rising rapidly, the annual rate of growth of Medicare expense is projected to increase from 7. 4 percent in 2008 to about 8. 9 percent in 2016. (Medicare spending is expect to rise by 17 percent this year and 14 percent in 2007 as the new prescription drug program gets below way.) Rapid growth is also projected for Medicaid spendingan average of 8. 3 percent annually from 2008 to 2016. According to Congressional Budget Office, Social Security, Medicare, and Medicaid in concert will account for 56 percent of all federal spending by the end of the projection period (up from 43 percent in 2006). Measured as a share of the economy, spending for the three programs will equal 10. 8 per cent of GDP in 2016, up from 8. 7 percent this year.In addition, no evidence suggests that the growth of health care costs, which have risen faster than GDP over the past intravenous feeding decades, is likely to slow significantly in the future. As a result, spending for Social Security, Medicare, and Medicaid will exert pressures on the budget that economic growth alone is unlikely to alleviate. A substantial reduction in the growth of spending and perhaps a sizable increase in taxes as a share of the economy will be necessary for fiscal stability to be at all likely in the overture decades.ReferencesBaker, Gerard. U. S. economy may be headed for a big crash. The Times of London. luxurious 23, 2006. 23 Aug 2006. Barrell, Ray et al. World Economy Forecast. National Institute stinting Review. 28th July, 2006. No. 197. Baumohl, Bernard. Mid-Year U. S. Economic Forecasts For 2006 and 2007. Wharton School Publishing. June 15, 2006. 23 Aug 2006.