Top 4 Economic Predictions On The U.S. Economy for The Coming Decade: How will it affect You?
We feel some of you have made plans for your long-term financial future and some of you are on the verge of starting this exercise. Are we right? We guess so.
But, do you know about the factors that would most likely have a bearing on the performance of the U.S economy in the next 10 years? Well, we will let you know about these as they may affect your personal economy as well, directly or indirectly.
1. The federal debt is likely to increase
The federal debt leapfrogged the $ 21 million figure in 2018 but remained largely stable after sequestration came in. With this, the Congress went through the mandatory 10 % budget cut up to 2021. Moreover, the current debt-to-GDP ratio of 104 % cannot guarantee a level of sustainability in the event of a rising interest rate. The ‘on-the-debt’ interest payments will only increase beyond the benchmark of 77 % as recommended by the IMF.
The policies of the Trump regime are likely to increase the debt by $5.6 trillion. The much-debated Tax Cut and Jobs Act has already added $1 trillion, in spite of the promise to decrease the debt. Economists are of the opinion that – although lowering of business taxes allows the use of funds to recruit more workers, this system fails to work when the tax rate is below 50 %. According to them, it only adds to the debt.
The common people like you will be affected as a result of this uncertainty over how Washington should reduce the debt. There may be spending cuts on the budget and hence, the tax rates, federal programs, and other benefits may not be as useful as they have been for you. Businesses may also respond to this uncertainty by delaying major investments, hoarding cash or by exercising job-cuts.
2. The Dollar may continue to decline
The Dollar value is likely to decline as foreign investors will be more concerned regarding the U.S. debt. They will also get the impression that the U.S. would like to keep the Dollar value low to lower the relative value of the national debt. Hence, the investors will look to diversify their existing and new portfolios with non-dollar assets like the Euro.
The dips in Dollar value will have a bearing on everything you buy as it will increase the import process (it will contribute to inflation) and will decrease export prices.
3. Price of Oil and Gas will Rebound
In their ‘outlook’ of average Brent oil prices during the period from 2018 to 2040, the U.S. Energy Information Administration has predicted that the price will rise to $ 85.70/b by the year 2030. They have also predicted that by 2040, all the cheap sources of crude oil would exhaust and extraction of oil will be more expensive as a result.
This rise in oil price will push up gas prices too. It will raise the cost of food as the cost of transportation will increase.
Now that you come to know about these predictions, you should be able to plan accordingly so that you perform better financially in a foreseeable future.
4. Healthcare Cost will Increase
This is bound to happen as President Trump has revoked the Obama care Tax levied on people not having any health insurance. According to experts, millions of people will opt out of coverage and it will not benefit the insurance companies as most of these ‘dropouts’ are healthy enough. The companies will try to recover their ‘loss’ from the insured, thereby, increasing the health care costs.
Without the backing of regulations, new policies will not have as much coverage as they used to offer earlier and you will end up spending more from your own pockets.