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2008 OECD Economic Surveys: United States 2008

image of OECD Economic Surveys: United States 2008

This 2008 edition of OECD's periodic survey of the United States economy examines key economic challenges the US will face in the coming years including the financial crisis and health care reform.

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Key policy challenges

The United States is facing very difficult economic conditions. After a long period of robust economic growth, a protracted downturn in the housing market has triggered a severe financial crisis, which is weighing heavily on real activity. The authorities have vigorously used monetary and fiscal policies to attenuate the downturn in GDP growth. Further support would be desirable, if financial and economic conditions do not quickly improve. As soon as the recovery is firmly established, however, substantial fiscal consolidation will be required to put public finances on a sustainable long-term path. Financial sector regulation will also need to be reformed to overcome the weaknesses exposed by the crisis, in particular by moving to a more unified, comprehensive and objective-oriented model of supervision. Despite recent economic difficulties, the longer-term outlook for the US economy remains favourable, supported by solid productivity growth. Nevertheless, the fruits of growth have not been evenly distributed in recent decades, raising questions about the social sustainability of such growth. There are also growing concerns about highly unequal financial access to health care in the United States, which may contribute to the mediocre health status of the population by international comparison despite very high levels of expenditure. Health insurance reform to give better financial access to health care to low-income persons would help to overcome some equity and efficiency concerns. US greenhouse gas (GHG) emissions continue to be a major contributor to global emissions. Substantial reductions will be required if global co-operation to combat climate change is to succeed. Appropriate pricing on carbon emissions to reflect their environmental cost would allow emission reductions to be achieved at lowest economic costs. 

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