US Economic Forecast 2013-2016

FED Headquarters in WashingtonNew FED Forecast 2013-2016 

"The 85 billion Per Month Program in US Bonds Purchases is not Postponed.."

 

The US Federal Reserve recently postponed the start of the wind down of its massive monetary program that aims to support the US economy. FED shall wait for more solid economic evidence concerning the US economic growth before cutting its $85 billion per month program regarding US bond purchases.

The FED Chairman Ben Bernanke during June, had said that the Fed expected to cut back its US bond purchase program before the year end. Now instead he argues: “There is no fixed calendar schedule” and "If the US economy data confirm our basic outlook, then we could move later this year" Furthermore, Bernanke declined to comment on his own future.  

Here is what the FED forecasts regarding the US economy during 2013-2016 

ECONOMIC GROWTH FORECAST

The Fed cut its forecast for 2013 economic growth to a 2.0-2.3% range. The previous estimation was a range between 2.3% and 2.6%. The Fed's projection range for 2013 real GDP is 1.8% to 2.4%, down from 2.0% to 2.6% in June. For 2014, the Fed is forecasting GDP growth of a range between 2.2% to 3.3%, down from the previous forecast of 3.3% to 3.6% (June 2013). 

US UNEMPLOYMENT RATE

The Fed forecasts that the US unemployment rate for 2013 will be in a range from 6.9% to 7.3%. The previous estimation in June was 6.9% to 7.5%. Note that the U.S. jobless rate in August 2013 was 7.3%.

During the upcoming years the US unemployment is expected to decline furthermore. For the year 2016, the Fed is forecasting an unemployment rate of 5.2% to 6%. The FED Chairman Ben Bernanke, said regarding the future US unemployment rate: “A jobless rate of 7.0 percent is not a magic number". 

US INTEREST RATES

The Fed has held overnight interest rates near zero since 2008 while it has tripled its balanced sheet to more than $3.6 trillion. That support took place through three rounds of purchasing US bonds, holding by this way the general borrowing cost down.

Currently, the US interest rate is at 0.25%. According to FED we are going to witness higher rates during the next years. In 2016, the Fed will target an interest rate close to 2.0%.

The Fed supported that it would not start raising the US rates at least until the US unemployment falls to 6.5% and as long as US inflation does not move above 2.5%.

The US Economy vs the Eurozone at a Glance

Here is a basic comparison table between the US and the Eurozone economies (3rd quarter 2013). 

 

 GDP USD  TRILLION

 INTEREST RATE

 INFLATION

 JOBLESS RATE

GOV. BUDGET

 DEBT/GDP

 CURRENT ACCOUNT

UNITED STATES

15.7

0.25%

1.50%

7.30%

-8.50%

101.6%

-3.0%

EURO ZONE

12.2

0.50%

1.30%

12.10%

-3.70%

90.6%

1.50%

Source: Trading Economics, IMF

Here are the main FED forecast charts for the years 2013-2016.

US Economy Forecast 2013-2016

The Forecast chart regarding the US interest rates for the upcoming years.

 

Here is more info about what FED forecast regarding the course of the US economy. » Press here to see the data in new window.

Link: » Board of Governors of the Federal Reserve System

 

FED Economic Forecast

Capital Investor, 2013

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