US Government Budget Assumptions and International Consensus re Consumption Growth Rates

This post summarizes, in pictures, the consumption growth forecasts for America and the world, which underlie the US Government (USG) FY 2011 Budget published in January 2010.  The growth assumptions are almost identical with those of the IMF, the World Bank and other international economic agencies.



The first chart focuses on history from 1995 and forecasts GDP through 2020.  USG budget expenses are forecast through 2015. 

Note that the US budget GDP forecast for US GDP is slightly more optimistic than the "IMF" US GDP forecast, and that both forecasts show slightly faster growth in the future than in the last two decades.

The next chart takes the annual US and World GDP history and forecast numbers shown above and charts the the annual %  change in US and World GDP since 1970 and the projected growth for the US and the world from the 1970s through 2030.  I have used a 5 year moving average to smooth out the year to year fluctuations.

 
The next chart shows the average % growth in GDP/capita per decade from 1970 through 2020.  Note the rebound in the coming decade.

My final chart is a repeat of an earlier chart trending world and US GDP out to 2040

In the last three posts, we have looked at the very long term history of consumption growth, and the forecast consumption growth for the next two decade.  The historical and forecast data says:

• With the exception of a bump here or there, for the next two decades, the world and the US will continue on a path of growing total consumption at a rate slightly faster than the rate of the last four decades. 
• World consumption will grow at a Compound Annual Growth Rate (CAGR) of nearly 4%, and US consumption will grow at a CAGR of nearly 3%.  A CAGR of 4% means a doubling in 18 years, and a CAGR of 3% means a doubling in 24 years.
• After falling for nearly four decades, the average GDP/Capita growth rate in the world and in the US, will double in the next decade.
• Measured in $2005, the 2030 world GDP will  approach $100 Trillion and US GDP will approach $22 Trillion, from approximately $50 Trillion and $14 Trillion respectively today.
• With the exception of a few decades in the middle of the 20th century, these growth rates are far higher growth rates than mankind has ever achieved.

In the next several posts I want to meditate on  the likelihood of these forecasts being met, the implications of meting and not meeting them, and the likely actions to be taken by us Americans to ensure meeting them.