Former IMF Chief Economist Mussa Predicts 4 Percent Economic Growth for US and World Next Year with US Unemployment Dropping Below 9 Percent
Source: Peterson Institute for International Economics

While most economic forecasters expect a tepid recovery this year and next, a leading economist at the Peterson Institute for International Economics (PIIE) is predicting that GDP growth in the United States and the world will be considerably higher than generally anticipated. Michael Mussa, senior fellow at PIIE and former chief economist at the International Monetary Fund (IMF), predicts that real GDP growth in the world will be 4.2 percent in 2010 over 2009, and real GDP growth in the United States will be 4.0 percent from the middle of 2009 through the end of next year. This is only about two-thirds the pace of typical US recoveries from sharp recessions but it is nearly double the consensus predictions of other top forecasters.

The Mussa projections also imply a cumulative rise of US real GDP from the second quarter of 2009 to the final quarter of 2010 of almost 7 percent, or about $875 billion in 2005 real dollars. This is considerably higher than the August 2009 Blue Chip Survey, which projected a cumulative rise of barely more than 3 percent. Blue Chip forecasts suggest unemployment in the United States rising above 10 percent. Dr. Mussa projects it to peak at or a little below 10 percent this year and below 9 percent by the end of next year.

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