Web: oe.cd/USA-snap@ @OECD OECDeconomy 2022 OECD ECONOMIC SURVEY OF THE UNITED STATES Washington, D.C., October, 12th 2022
2 The US economy has rebounded strongly from the pandemic Source: OECD Economic Outlook Database. Real GDP Index 2019Q4 = 100 86 88 90 92 94 96 98 100 102 104 106 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 USA OECD excl. USA
The labour market remains tight
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Source: Bureau of Labor Statistics. Indicators of job openings and turnover % 0 1 2 3 4 5 6 7 8 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Hiring rate Quit rate Job opening rate
Wages
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are rising, especially for low-income earners Source: Federal Reserve Bank of Atlanta. Wage growth by quartile % 0 1 2 3 4 5 6 7 8 2008 2010 2012 2014 2016 2018 2020 2022 Low income Lower-middle income Higher-middle income High income
Inflation
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has surged and broadened Notes: The measure of underlying inflation is the Trimmed Mean PCE inflation rate, published by the Federal Reserve Bank of Dallas. Source: Federal Reserve Bank of Dallas; Bureau of EconomicAnalysis. Inflation Y-o-y % changes -2 0 2 4 6 8 10 12 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 Headline inflation Underlying inflation
Monetary policy is tightening rapidly
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Source: US Federal Reserve. Policy rate % 0 2 4 6 8 10 12 14 16 18 20 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022
The
Cumulative
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structural fiscal deficit is being reduced after a large increase during the pandemic Note: The size of the fiscal expansion is determined by the cumulative percentage point difference in the underlying primary balance (as a percentage of GDP) between 2019 and 2021. Source: OECD Economic Outlook Database -10 -8 -6 -4 -2 0 2 4 GRC SVN USA LVA ITA GBR AUT CAN NZL KOR DEU NLD AUS HUN SVK FRA BEL ISL IRL CZE CHE LTU LUX FIN JPN DNK EST SWE ESP PRT POL ISR NOR
underlying fiscal deficit % of GDP, 2019-21
Economic projections for the United States
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Source: OECD 2021 2022 2023 Real GDP 5.7 1.5 0.5 Inflation (PCE) 3.9 6.2 3.4 Core inflation (PCE) 3.3 4.7 3.1 Unemployment rate 5.4 3.7 4.3
Fiscal challenges loom with an ageing population
Gross general government debt
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Source: OECD Long-term Model
Without reforms to offset ageing costs, % of GDP 0 50 100 150 200 250 300 350 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 With reforms to offset ageing costs Without reforms to offset ageing costs Without reforms to offset ageing costs & +1 pp interest rate shock % of GDP
The
Tax
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tax administration is understaffed Source: OECD Tax administration 2021.
administration staff Population per total tax administration full time equivalents, 2019 0 1000 2000 3000 4000 5000 6000 7000 8000 LUX SVN DNK CZE HUN LVA BEL DEU POL NLD NOR CAN SVK IRL NZL PRT LTU SWE FIN AUT GBR GRC ISR ISL AUS FRA ITA EST TUR JPN ESP KOR CHL MEX USA CRI COL CHE Countries with less staff resources
Spending on pharmaceuticals is very high
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Source: OECD Heath statistics. Expenditure on retail pharmaceuticals USD per capita, PPP, 2021 or latest available 0 200 400 600 800 1000 1200 1400 CRI COL MEX ISR DNK NLD POL NOR EST SVK LVA PRT ESP SWE FIN CZE LUX GBR SVN ISL BEL HUN IRL LTU AUS AUT ITA FRA KOR GRC CHE CAN DEU JPN USA
The
of
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governance
infrastructure projects could be improved Source: OECD Infrastructure Governance Indicators 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 USA CHL BEL DEU SVN MEX LUX NZL AUS NOR ESP COL JPN HUN KOR GBR AUT CRI LVA FIN PRT ITA ISL SVK GRC TUR IRL EST LTU CAN CHE OECD average Composite indicator 0-1 scale
Middle-class income growth has been slow
Income after taxes and transfers
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-20 0 20 40 60 80 100 120 140 1979 1984 1989 1994 1999 2004 2009 2014
Cumulative growth in average income by income quintile, 1979-2018 Lowest quintile Middle three quintiles Highest quintile Source: Congressional Budget Office
Costs have been rising
expenses and
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100 110 120 130 140 150 160 170 180 190 1995 1999 2003 2007 2011 2015 2019 Costs of major
median income Index 1995 = 100 Housing costs Education costs Health care costs Median household income Source: Bureau of Labor Statistics, Current Population Survey
15 The middle class has shrunk as income dispersion has risen 40 45 50 55 60 65 0.3 0.32 0.34 0.36 0.38 0.4 0.42 0.44 0.46 0.48 0.5 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Gini coefficient and proportion of middle class households 1970-2020 Gini coefficient (LHS) % of households earning between 67% and 200% of median income (RHS) Note: Pre-tax income. Source: Bureau of Labor Statistics, Current Population Survey
Child
Typical
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care costs are elevated 0 10 20 30 40 50 60 GBR JPN IRL USA CHE SVK CAN AUS FIN NLD ISR SVN FRA OECD BEL DNK LTU LVA GRC EST HUN NOR ESP POL PRT ISL LUX SWE KOR AUT DEU CHL CZE ITA
net child care costs % of women’s median full-time earnings, 2019 Source: OECD Tax and Benefit Models
17 Enrolment in child care is low 0 20 40 60 80 100 ISR GBR FRA BEL DNK IRL ISL ESP NOR NZL SWE KOR ITA DEU EST LVA SVN HUN PRT LTU JPN EU CZE FIN AUT OECD NLD LUX POL SVK AUS CHL COL MEX USA GRC TUR CRI CHE Enrolment rates in child care (3-year-olds) %, 2018 or latest available year Sources: Eurostat and OECD Education at a Glance 2020
Public
on child care
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spending
is low Sources: Eurostat and OECD Social Expenditure Database 0 2000 4000 6000 8000 10000 12000 14000 16000 LUX ISL NOR SWE DNK FRA FIN KOR DEU BEL JPN NLD EU OECD NZL AUT ITA AUS LTU EST SVN GBR HUN LVA ESP IRL SVK CZE USA ISR PRT POL CHL MEX TUR COL Public expenditure on child care and pre-primary education per child aged 0-5 USD PPP, 2017 or latest available
Meeting the net zero emissions target
Total greenhouse gas emissions, required trajectory to achieve net zero by 2050
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will require further progress Note: A projection is shown for 2021 data given the lag in data availability. Source: OECD Environment Statistics (Air and Climate) - GHG emissions database; OECD calculations. 0 1 2 3 4 5 6 7 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Billion tonnes of CO2 equivalent Target=50-52% reduction below 2005 levels by 2030 2020-2030 2031-2050
Emissions
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of low- and middle-income households are relatively low Source: World Inequality Report 2022 and Chancel (2021). 0 10 20 30 40 50 60 70 80 Bottom 50% Middle 40% Top 10% GHG emissions per capita by income level Tonnes of CO2 equivalent, 2019
Emissions from homes and transportation are significant
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Note: Excludes emissions and removals from Land Use, Land Use Change, and Forestry. Source: Environmental Protection Agency 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1990 2020 GHG emissions by sector % of total CO2 equivalent emissions (electricity-related emissions distributed to economic sectors) Industry Transportation Residential Commercial Agriculture
Personal vehicles are a major source of
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emissions Source: Environmental Protection Agency 0 200 400 600 800 1000 1200 1400 1600 1800 2020 Transportation GHG emissions, by source Tg CO2 equivalent Passenger Cars Light-Duty Trucks Medium- and Heavy-Duty Trucks Buses Motorcycles Commercial Aircraft Other Aircraft Ships and Boats Rail Pipelines
For more information
Disclaimers:
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
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Annex
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Main recommendations for ensuring a sustained recovery in output and jobs
Continue to raise the Federal Funds Rate.
Further reduce the fiscal deficit while continuing to invest in combatting climate change and improving the social safety net.
Phase out regressive distortions from the tax code.
Continue to modernise and streamline unemployment insurance systems, strengthening integration with job search assistance and training schemes.
Reduce tax evasion by investing further in the Internal Revenue Service.
Further expand the number of pharmaceuticals subject to negotiation by Medicare.
Establish a dedicated federal institution tasked with ongoing crosssectoral and cross-state advisory about infrastructure priorities and best practices.
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Main recommendations to improve access to child care
Raise
public funding for child care and expand eligibility for public programmes.
Establish
minimum federal standards for child care and implement a tiered quality rating system
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Main recommendations to support the middle class through the climate transition
Make use of regulation, public investment and carbon pricing to meet emission reduction targets
Develop a national climate strategy that explicitly takes into account emissions inequalities and the redistributive effects of climate policies
Raise public expenditure on ALMPs
Expand existing weatherisation and retro-fitting programmes and update building energy codes
Accelerate the tightening of fuel efficiency standards
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