There is a growing consensus that the United States will enjoy solid economic growth in 2022 despite concerns about inflation, supply chain disruptions, COVID-19, and Federal Reserve tightening. The Conference Board, a research group comprising over 1,000 public and private corporations, forecasts that the U.S. economy will grow by 3.5 % in 2022.

The main challenges to the United States and the global economy in the next decade come from a continued trend toward deglobalization and faster-than-expected inflation. The transition toward decarbonization of economies in response to climate change will create challenges and opportunities for global growth.

Despite the acceleration of new COVID-19 cases in December, largely associated with the Delta and Omicron variants, America enjoyed strong growth in Q4 2021.

COVID-19 remains a threat but its economic impact is fading. There remains uncertainty regarding the transmissibility, severity, and effectiveness of existing vaccines against Omicron. World Health Organization officials, in recognition of the dangers inherent with COVID-19, are advocating more coordinated and decisive efforts to vaccinate the world’s population to prevent the emergence of new, more dangerous variants.

The Food and Drug Administration (FDA) recently granted emergency authorization to Pfizer’s COVID treatment pill for patients 12 years and up with mild to moderate COVID symptoms who are most likely to end up hospitalized. The agency said it should be prescribed as soon as possible after diagnosis and within five days of symptom onset.

The United States is experiencing robust but an uneven rebound from the pandemic. Demand growth is outstripping supply growth because of unprecedented fiscal and monetary stimulus.

A consensus of economists forecast a decline in the unemployment rate from the current 4.2%. The Bureau of Labor Statistics (BLS) wrote, “As the nation’s demographic shift continues, with the baby-boom generation moving into retirement, the labor force participation rate will continue to decline, moderating growth.”

The U.S. Census Bureau released a report that the U.S. population grew at a slower rate in 2021 than in any other year since the founding of our nation. This year was the first time since 1937 that the U.S. population grew by fewer than one million people.

In response to COVID-19, households have redirected their spending away from activities that are “locked-down” (food and entertainment) and towards durable goods. Governments have eased COVID restrictions because of vaccines and the ability to more precisely target and curtail certain types of activities.

On Wednesday, in a fresh sign of his growing concerns about inflation, Federal Reserve Chairman Jerome Powell said the Federal Reserve can’t be sure that price increases will slow in the second half of next year. To stem inflation, we can expect the Fed to stop bond purchases and raise interest rates three times in 2022.

These are my recommended policy prescriptions to boost the economy:

  1. Aim for gradual reductions of the government’s deficits.
  2. Simplify our tax system. Lower tax rates and allow fewer exemptions with the aim of creating incentives for people to enter the labor force, decrease income polarization, and support low-and middle-income households.
  3. Invest more in infrastructure.
  4. Encourage Green Energy Projects.
  5. Promote a level playing field in trade. Impose tariffs to prevent the pricing of products in the U.S. below the pricing in their country of origin.
  6. Support low-and middle-income households by improving educational opportunities and offering childcare support for low-and middle-income families. Expand the Earned Income Tax credit, increase the federal minimum wage, and increase work incentives.
  7. Adopt a skills-based immigration reform.
  8. Strengthen healthcare coverage while containing healthcare costs.
  9. A recent IMF study showed the decline in the U.S. share of income that is paid to workers is broad-based across states and industries. To counter this negative trend, we need to establish policies that upgrade workers’ skills.

Originally published in the Sarasota Herald-Tribune