24/7 Wall St. has looked at these government projections, as well as those from several organizations that include economists and think tanks. For the most part, financial forecasts issued by independent groups are less affected by politics than those issued by the government. Their projections provide more realistic measurements of the impact of government spending on the overall economy over the next five years, and how this will affect the following five years after that. Their observations are based on a fundamental understanding that:
Entitlement programs will have to change considerably.
Military spending will decrease out of economic necessity and a less aggressive U.S. role in foreign conflicts.
The longevity of many Americans will change spending habits.
The federal government will most likely implement effective programs to aid the housing market. This housing aid probably will provide a primary foundation for a sharp recovery in the U.S. economy.
24/7 Wall St. looked at nine specific and critical measures of economic health and forecast how each would appear in 2020. These are housing prices, real income, inflation, military spending, entitlements, unemployment, taxes, interest rates and the state of the U.S. deficit and debt. These are our conclusions:
Eoin Treacy's view The USA is going through a difficult adjustment following the credit boom that ended in 2008. There are a number of challenges ahead and inspired leadership will be required to deliver the reforms necessary to put the country back on the path to long-term prosperity.
Entitlements as they are currently structured are unaffordable and will have to be reformed one way or another. The military spend of the last decade is already being reformed. The withdrawal from Iraq is a positive development. Military spending over the next decades is likely to focus much more on counteracting cyber spying and offensive measures against computer networks.
In our view, the USA has an invaluable opportunity to become energy independent through greatly expanding unconventional oil and gas development, expanding the nuclear industry and encouraging consumers to run their vehicles on domestically produced fuels such as gas. Of all the alternatives, the energy and technology sectors offer the best hope for the US to grow its way out of trouble.
It remains to be seen just how many of these reforms will be implemented and when.