3.1.3 Economic Outlook The US. economy is expected to be well positioned for long‐term growth at historical long‐term averages. Real GDP (i.e., taking into account the estimated capacity to produce more) is expected to grow at about its potential equilibrium rate (between 3.1 percent and 3.3 percent per year) through 2011. In addition, inflation is expected to remain relatively low and stable with the CPI (excluding food and energy inputs) forecasted to Increase at a level 2.4% through the six‐ year forecast period ending 2011. The labor market (measured by unemployment) is also expected to remain stable at 5.0%. Finally, an Increase in short‐term borrowing rates (measured by Day Treasury Bills) and a widening of the spread to longer term borrowing rates (measured by Year Treasury Notes)
Page 45 of 141 return the interest rate environment (and the financial markets in general) to more familiar ground The key characteristics of the economic forecast through 2011 are captured in the table below
