Economic growth will slow down over the long term due to population aging and its impact on the size of the working-age population. Average annual gains in the 1.7–1.8 per cent range are anticipated through 2045.
Potential economic growth will be restrained by weaker investment spending. Spending on equipment will expand at a faster pace than on structures, as companies will increasingly have to deal with labour shortages that force them to spend on new labour-saving technologies.
Fiscal deficits surged in 2020 due to the spending required to support the economy during the pandemic. Deficits will slowly decline over the medium term but will remain well above the $1-trillion mark. The U.S. won’t see another fiscal surplus until the 2040s.
Over the long term, consumers will spend less on durable goods and more on services, such as health care.
Housing markets have soared during the pandemic. But that won’t last through the long term as mortgage rates rise and an aging population becomes less interested in purchasing single-family dwellings.
Trade and current account deficits will persist through 2045 as imports expand at a slightly faster pace than exports.
In general, the U.S. economy will be a more digitized and less equal economy through 2040, a development closely linked to the lasting effects of the pandemic.
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