HONG KONG (Reuters) – The U.S. economy is expected to grow by 2.5 percent in 2013, improving to 3.5 percent growth in 2014, Chicago Fed President Charles Evans said at the Asian Financial Forum in Hong Kong.
Evans also forecast the U.S. unemployment rate would be 7.4 percent this year, easing to about 7 percent in 2014.
Last month, Fed policymakers said they expected GDP growth of between 2.3 and 3.0 percent this year, and 3-3.5 percent in 2014.
You’re not going to get 3.5% growth with chronic 7% unemployment in the US. In the chart above, note the few times in the US that’s happened. Look at the speed at which things were changing. It occurred during the Reagan presidency, but, it was momentary and the economy was growing at a fast rate. Our economy isn’t growing at a fast rate, and if it weren’t for the printing of money, I doubt that it would be growing at all.
Thanks to Zero, though, this inverse rule will have to be expressed in a different manner. It is possible that our official unemployment rate will drop below 7% but, and our economy remain stagnant.
Even if the official unemployment rate drops below 5% (which no one is predicting) we’d still have too many people not working to sustain any real economic growth.
While we’re playing at the BLS, here’s some other interesting graphs.