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2006 OECD Economic Outlook, Volume 2006 Issue 1

image of OECD Economic Outlook, Volume 2006 Issue 1
OECD's twice-yearly assessment of the major economic trends and policies in member countries and selected non-members. This issue covers the outlook to the end of 2007.  Together with a wide range of cross-country statistics, the Outlook provides a unique tool to keep abreast of world economic developments. This issue also contains a special chapter on Future Budget Pressures Arising from Spending on Health and Long-Term Care.

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United States

The economy continues to perform impressively. Output has grown strongly, the unemployment rate has fallen and core inflation has been relatively stable. All this has been achieved despite high oil prices and damaging hurricanes. Solid economic growth seems set to continue, albeit at a slightly slower pace. The projected moderation in growth reflects a lagged response to higher oil prices, higher interest rates and a cooling of the housing market. The stance of monetary policy, currently near neutral, needs to tighten slightly to keep the economy in balance. The federal government budget deficit seems likely to settle around 3% of GDP as higher spending on prescription drugs, defence and hurricane relief is offset by surprisingly strong revenue growth. Little progress has been made so far on reform of taxation, entitlements or other longstanding fiscal problems.

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