IMF Report on US Economy

IMF Report Link Here

This link takes you to the IMF website and opens a PDF report (July 2010) on the US economy as seen through the eyes of world bankers. Real estate, debt and labor are discussed at sufficient levels to understand the projections.

Below is the table of contents from that report. What they all do not say is that the reserve currency they all are holding, (the US dollar), and will increase in holding is worthless, but that discussion is for a different day. 

INTERNATIONAL MONETARY FUND
UNITED STATES
Selected Issues
Prepared by Nicoletta Batini, Oya Celasun, Thomas Dowling, Marcello Estevão,
Geoffrey Keim, Martin Sommer, and Evridiki Tsounta (all WHD)
Approved by Western Hemisphere Department
July 12, 2010
Contents Page
I. The Great Recession and Structural Unemployment ....................................................4
A. Introduction ...............................................................................................................4
B. Methodology .............................................................................................................5
C. Policy Implications ....................................................................................................7
II. Prospects for the U.S. Household Saving Rate ............................................................14
A. Introduction .............................................................................................................14
B. Experience of Nordic Economies ............................................................................14
C. Cross-Country Models of the Saving Rate ..............................................................15
D. What is the New Optimal Wealth Level? ...............................................................16
E. Conclusions .............................................................................................................16
III. Production and Jobs: Can We Have One Without the Other? .....................................22
A. Introduction .............................................................................................................22
B. How Does this Recession Compare to Previous Ones? ..........................................23
C. How Will the Recovery be Like? ............................................................................24
D. Conclusions and Policy Implications ......................................................................26
IV. The Financing of U.S. Federal Budget Deficits ...........................................................37
A. Introduction .............................................................................................................37
B. Post-Crisis Financing Patterns ................................................................................37
C. Baseline Projections of Demand for Treasury Debt ................................................38
D. A Model of Saving-Investment Flows ....................................................................39
E. Conclusions .............................................................................................................41
V. The U.S. Government’s Role in Reaching the American Dream ................................44
A. Introduction .............................................................................................................44
B. Impediments of the Current System ........................................................................45
C. Lessons from Other Countries.................................................................................46
D. Conclusions and Policy Implications ......................................................................48
2
VI. The U.S. Fiscal Gap: Who Will Pay and How? ...........................................................52
A. Introduction .............................................................................................................52
B. Methodology ...........................................................................................................52
C. Results .....................................................................................................................54
D. Conclusions .............................................................................................................56
A. What is the Fiscal Gap? ..........................................................................................63
B. What Are Generational Accounts? ..........................................................................63
Figures
I. l. Increase in Skill Mismatch Index Since Onset of Recession .........................................9
I.2. Labor and Housing Market Dispersion ........................................................................10
I.3. Change in Foreclosure Rates, 2005–2009 ...................................................................11
I.4. Estimated Equilibrium Unemployment Rate at End-2009 by State ............................12
II.1. U.S. Household Saving Rate Adjustment Could be Protracted ...................................19
III.1. Real GDP Growth and the Change in the Unemployment Rate, 1902–2009 ..............28
III.2. Long-Term Unemployment Across U.S. Postwar Recessions ....................................28
III.3. Rolling Okun’s Law Coefficients and Growth Compatible with Stable
Unemployment, 1915–2009 .............................................................................29
III.4. Comparing the Steep Recessions and Job-Rich Recoveries ........................................30
III.5. Comparing the Most Recent Recessions and Jobless Recoveries ...............................31
III.6. Comparing the Great Depression and the Great Recession .........................................32
III.7. Stock Market Volatility versus Rolling Okun’s Law Coefficients ..............................33
III.8. Impulse Responses from a Tri-Variate SVAR.............................................................34
III.9. Unemployment Scenarios ............................................................................................35
V.1. Housing Finance in the United States and Other OECD Countries .............................50
VI.1. U.S. Debt in Percent of GDP (1930–2083)..................................................................60
VI.2. U.S. Federal Fiscal Overall (solid) and Primary Deficit (dotted) in Percent of GDP
(1980–2083) .....................................................................................................60
VI.3. Total Revenues andTax Revenues in Percent of GDP—Advanced G-20 Countries ...61
Tables
I.1. Explaining Changes in State-Level Unemployment Rates ............................................8
II.1. Household Saving Rate: Baseline Regression Results ................................................18
III.1. Estimating Labor Demand and Okun’s Law for a Panel of Countries ........................27
IV.1. Projections of Baseline Demand for U.S. Treasury Securities and the Impact
of Excess Supply on Long-term Bond Yields..................................................42
V.1. United States and Canada: Housing Finance ...............................................................49
VI.1. Macroeconomic Assumptions Underlying Budget Projections ...................................57
VI.2 U.S. Fiscal Imbalance in Terms of the Present Discounted Value of GDP .................57
VI.3. Fiscal Imbalance in Terms of the Present Discounted Value of GDP, 3 Percent
Discount Rate ...................................................................................................58
VI.4. Lifetime Net Taxes as a Share of Present Value of Labor Income under Different
Scenarios, 3 Percent Discount Rate .................................................................58
3
VI.5. Impact on Fiscal Gap (as % of PVD of GDP) of Fiscal Adjustment by 2015 and
of Cap on Medicare ..........................................................................................58
VI.6. Additional Percent Increase in Taxes and/or Cut in Transfers Necessary to Close
the Fiscal Gap if Adjustment Starts in: ............................................................59