US Long-Term Economic Outlook: An Industries Perspective

Business Monitor International (BMI) has just published its outlook for the US economy. We forecast that US real GDP will expand at an average annual rate of about 2.4% over the next five to 10 years, which is below historical trend. While GDP is typically forecast using the expenditure approach (consumption + investment + government spending + exports – imports), we have decided to take a sectors approach to compliment our expenditure forecasts and identify some of the key sectors that will help drive growth over the coming decade.

In this vein, we highlight the oil and gas, banking, real estate, manufacturing and healthcare sectors. One common theme is that several of the sectors we mention will help underpin the strength of consumers, which, at about 70% of GDP, remains the most important segment of the American economy.

  • The Oil & Gas sector will help strengthen the US recovery by reducing the drag from the trade deficit over the coming years.
  • The housing market remains key to the US economic recovery, and we forecast that the market will continue to improve, albeit slowly, which will be instrumental in shoring up household balance sheets.
  • The substantial deleveraging in the banking sector over the past five years means that the worst is behind us, and with several forward-looking indicators showing signs of stability, we see potential for the banking sector to expand slowly, underpinning the economic recovery.
  • The US will continue to regain competitiveness in the manufacturing sector as productivity growth outpaces that of wages and the US maintains a competitive advantage in energy efficiency. Moreover, demographic and regulatory changes mean that growth in the pharmaceutical and healthcare industry will be strong.

The full article is available to subscribers at Business Monitor Online.