Quarterly Review 1642

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No Relief in Sight for the U.S. Economy

David E. Runkle - Senior Economist

Fall 1992

Abstract
For at least the next two years, the U.S. economy will grow more slowly than it has on average since World War II. This is the forecast of a Bayesian vector autoregression model developed and used by researchers at the Minneapolis Federal Reserve Bank. The model's previous forecast—of a very weak start to the 1991–92 recovery—was remarkably accurate. Both forecasts are supported by evidence on long-term problems among consumers, in the commercial real estate industry, and at all levels of government. These problems will most likely constrain economic growth for years, although short spurts of strength could appear anytime, due to unpredictable special factors.


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