The global financial crisis (GFC) had a large negative effect on the US economy. A decade on the economy is only starting to shake off the ill effects of the crisis. Investment levels have recovered over the past few years, the unemployment rate is at decade lows and inflation remains meek. But like other advanced economies, wage growth has been sub-par and productivity growth has been lacklustre.
Inequality has also risen significantly as low wages growth has been felt by the middle class and less fortunate, who have not benefited from the large run up in asset prices. GDP growth is expected to stay around 2% p.a. from 2018 onwards. But higher US interest rates and the uncertainty associated with the Federal Reserve reducing its balance sheet, poses risk to the outlook. The US government’s recent tariffs and the subsequent response from China, represent a risk for both the US and global economy. Long term growth will be constrained by an aging population and slower productivity growth.