The United States

• Pages: 55

Near-term prospects for the U.S. economy are favorable, but the fiscal deficit poses long-term challenges.

Page 55

The U.S. recovery has been led by household consumption . . .

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Growth of labor productivity has surged, which should help support real wage growth.

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and the real exchange rate remains high, despite its recent depreciation.

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The biggest fiscal challenge will be to address the impending pressure on the Social Security and Medicare systems as the baby-boom generation retires.

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but business investment has begun to rebound, partly because of a recovery in corporate profits.

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The current account deficit has widened, net foreign liabilities have risen sharply . . .

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The federal budget balance has worsened since early 2001...