The US Economy Forecasting for the Next One Year - Statistics Project Example

The US economy forecasting for the next one year

Over the last 6 years the economic growth of the US has been observed to be relatively slower as compared to the rate of growth that was initially experienced in the economy. This is a rate that has been of influence to the ability of economist the forecast the performance of the US economy over the next one year with factors such as the price of the dollar and the emergence of economies such as China has raised doubts n any chances in this trend over the next one year. With reference to interest rates, unemployment rates, cost of living, GDP growth rates, and level of exports and imports, this paper will aim at forecasting the performance of the US economy over the next one year.

The interest rates are important in depiction of the state of an economy. In accordance to statistics on trends,it is likely that the interest rates in the US will be at 0.75 in the next twelve months. However, it will have raised to just 0.5in the next 3 months. The projection of the US Fed Funds Ratenormally takes place through the use ofan autoregressive integrated moving average model that is calibrated through the use of analytical expectations in accordance to previous trends. This involves the modelling of the past behavior of the interest rates in the US by using huge amount of data and adjustment of the ecomentric model co-efficient by taking into account what the historical trends might mean for future occurrences in the economy in terms of the interest rates.

However, owing to the elections that are going to take place at the end of the year 2016, the increase in interest rates is likely to be slower during the part of the fiscal year that falls under the years 2016 (Becker, Sidhu andTenderich 72). However, a different trend will be observed in the year 2017 when the US would have gone past the elections. This is likely to be as a result of the realization of the fact that normalization of the short-term interest rates to the 3% level will not be taking the economy far. This is likely to lead to a situation where there is an acceleration of the hiking of the short-term interest rates when it will be safest to do so for an improving economy.

In accordance with statistical data the rate of unemployment in the United states of America is likely to increase over the next one year. The unemployment rate is expected to have gotten to 5.30% in the next 12 months. Despite the fact that the unemployment rate in the US had experienced a stable rate in increase during the initial stages of last year, the stagnation that was experienced between the month of October 2015 and December 2015 and the subsequent increase in the months that follows can be used to predict that there will be an increase in the rate of unemployment in the US over the next one year (Tanous and Cox 122). However, following the decrease that was experienced during the first quarter there was another period of increase in unemployment rates in the US between the months of March and April in the year 2016. However, it should be noted that whichever way the increase in the rates of unemployment that will be significantly low. This is the main reason behind the assertion that the rate of unemployment would have gotten to 5.30% in the next one year. However, it should be noted that there is a slight unpredictability of unemployment trends in the US. There have been allot of ups and downs hat makes it highly impossible to predict the future rates of unemployment in the US. This is made even worse by the fact that it is an election year, which implies that there are allot of uncertainties.

The cost of living is likely to get higher in the US over the next one year. This is in accordance to the statistical data on the rate at which the of living has been increasing in the US over the past years. As far as the cost of housing is concerned, it was observed that there was an increase of about 6.6% in the month of April 2016. However, the increase in the cost of living in the month of April was slightly higher than the rate that had been forecasted after the evaluation of previous trends. The Consumer Price Index of the US as of 2011 was 224.94 which was an increase if the base period of 1982 to 1984 is anything to go by (Baily, Manyika and Gupta 101). Using this system, it can be estimated that the Consumer Price Index of the US will be 251.89 in the year 2017. This is an indication that it would have increased a great deal from the current Consumer Price Index of the US. The accuracy of this method in the prediction of the Consumer Price Index of the US in the years that followed 2011 makes it an appropriate way through which the Consumer Price Index of the US for the year 2017 can be forecasted. This prediction will likely to reflect in various aspects of consumption of consumer goods and services in the United States of America.

The graph below shows the Consumer Price Index of the US

Accessed from http://floatingpath.wpengine.netdna-cdn.com/wp-content/uploads/2013/09/US-Consumer-Price-Index-Annual-August-2013-600x375.png

There is likely to be a growth of the GDP of the US over the next one year. The gross domestic product (GDP) refers to a country’s total market value in terms of the total goods and services that are produced by an economy within the period of one year. The GDP of a country is always of high importance in the determination of the economic progress of a country because of its ability to reflect the manner in which an economy has been able to adjust to the rate of inflation that is faced by a country. There are a number of factors that can support the prediction that the GDP of the United States of America will be on the increase over the next year owing to the statistical data on the GDP growth rate of the country as from the year 2010 to 2016 (Karplus and Paltsev 134). The GDP growth rate of the US was at 1.49% in the year 2013 and 2.4% in the year 2016. In accordance to this piece of data, it is estimated that the growth rate of the GDP that will be experienced in the year 2017 will be 2.5%, which is slightly higher than the rate that is being experienced in 2016. This rate of growth of the gross domestic product (GDP) of the US will be considered to be in response to some of the trends that have been observed in the rate of increase in the gross domestic product (GDP) of the US over the past ten years. However, the uncertainties that are brought by political factors such as the general elections that are supposed to take place this year makes this prediction harder.

The GDP growth rate of the US is shown in the graph below:

Accessed from http://cdn.tradingeconomics.com/charts/united-states-gdp-growth.png?s=gdp+cqoq&v=201605091029n

Imports and exports are important determinant of the manner in which the economy of a country performs. The US remains to be one of the main beneficiaries of the increase in global trade. There is likely to be an increase in the rate of exportation over the next one year owing to the fact that there has been a general growth in global demand, which is an indication of more global markets. However, they will have to face fierce competition from emerging markets in Asia with statistics suggesting that the Asian giants such as China are likely benefitby having a growth of up to 30% of international trade. This is an indication that the rate of increase in exportation might be lower than expected because of the nature ofcompetition that they will be facing from the Asian economies. It should also be noted that there is likely to be a general increase in the import volume in theUS owing to the statistical datathat has been collected regarding the imports that have gone into the country over the past five years. This is a trend that has raised a point of discussion in various economic platforms.

It is clearly evident that there will be an increase in the rate of development over the next one year. However, it should be noted that the growth will be very minimal given the fact that there will be very minimal changes in the economic indicators that have been discussed herein.This is a prediction that can also be attributed to the political uncertainties that are associated to the general elections that are supposed to take place in this year, whichimplies that there might be less activities in some economic sectors and more activities in others.

Work cited

Baily, Martin Neil, James Manyika, and Shalabh Gupta. "US productivity growth: An optimistic perspective." International Productivity Monitor 25 (2013): 3.

Becker, Thomas A., Ikhlaq Sidhu, and Burghardt Tenderich. "Electric vehicles in the United States: a new model with forecasts to 2030." Center for Entrepreneurship and Technology, University of California, Berkeley 24 (2009).

Karplus, Valerie, and Sergey Paltsev."Proposed vehicle fuel economy standards in the United States for 2017 to 2025: impacts on the economy, energy, and greenhouse gas emissions."Transportation Research Record: Journal of the Transportation Research Board 2287 (2012): 132-139.

Tanous, Peter J, and Jeff Cox. Debt, Deficits, and the Demise of the American Economy. Hoboken, N.J: Wiley, 2011. Print.

Taylor, John B. "International monetary policy coordination: past, present and future." (2013).

Woodward, Maggie. "US Economy to 2022: Settling into a New Normal, The." Monthly Lab. Rev. 136 (2013): 1.