The Cougar Daily

Predictions for the 2018 Economic Year

Bekah Redinger, Staff Writer

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America’s economy has long been an indicator for the health of the international economy, often influencing markets around the globe. Depressions and recessions have done more to shape culture, politics, and the future of large groups of people than almost any other events in history. The 2018 calendar year is under much scrutiny from many analysts, all eager to determine what the outcome will be. Predictions for the year, overall, are positive and healthy: The gross domestic product is estimated to grow 2.5 percent, well within the range for healthy growth and the same rate at which the GDP increased in 2017, and more than 2016. A healthy rate of growth for one year is between 2 and 3 percent. Mr. Taylor, Coronado’s Economics teacher, said that “most economists think that it’s going to be somewhere between two and three percent for 2018, and certainly it would seem to be a good thing. So I think that we’re going to sustain growth.” He added that “a lot of the economists think that the tax cuts are going to be kind of like a sugar high and it’ll get us a half percent bump in GDP, so I think that we’re going to get GDP growth somewhere between 2.8 to 3.5 percent.” Unemployment is planned to decline, dropping to 3.9 percent within the next two years. In 2016, the unemployment rate was 4.7 percent.

Many people are saying, however, that the growth is not all-encompassing, and may not be enough. In many parts of the world, the economic gap between people is desperately wide. It is so bad that, according to the charity Oxfam, the 42 wealthiest people in the world possess as much money as the 3.7 billion poorest people in the world. A bull market, like the constant state of growth seen since the 2008 financial crisis, does little, in the long run, to lessen that gap or help people rise out of poverty.

In addition to this, it is a well-known fact that constant growth is unsustainable. In the past, periods of strong economic growth have been an indicator of possible periods of stagnation, leading to crashes. The most dramatic example of this is the 1920’s when a bull market led to the worst economic crash America has ever seen. Similarly, the Great Recession of 2008 was brought on by rapid, unchecked growth of the housing market. Mr. Taylor says that “the concern in one of the numbers that have come out in the last week was there are too many drivers to GDP growth and that’s labor force coupled with productivity. Productivity, I think from World War II to 2000 were running about 3 percent. Recently it dropped, and in the last ten years, it’s been down about 1.8 percent… and nobody’s quite sure why that was. With productivity being relatively flat, I’m not sure that we’re going to be able to sustain growth above three percent.”

Other concerns spring from the international economy, specifically in China. If the economy in China crashes, so will the global economy. China’s GDP is rapidly growing, and will likely grow more in the next few months. Assuming that means that the economy also has to crash, the effects could hit America’s economy hard.

The most important thing to do is to stay informed about what could happen in the economy and to be aware of the possibilities.

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