It is an outgrowth from the Marshall Plan, which oversaw the allocation of American aid to rebuild Europe. Based in Paris, it was officially established in 1961 with 35 member-nations to “compare policies.” It has traditionally painted a picture of poor economic prospects, to encourage more assistance from the developed nations, like the “selfish” United States.
In the first major economic projection since the gridlock-ending U.S. election this month, the OECD has published a remarkably optimistic projection. It projects world economic growth will rise from 2.9% this year to 3.3% next year and 3.6% in 2018. For the U.S. economy, it projects growth will increase from 2.1% year to 2.3% next year and 3.0% in 2018. As the President-Elect would say, this is HUGE!
It also predicts U.S. unemployment will fall from an already low 4.9% to 4.5% next year, with inflation rising from 1.2% this year to 2.2% in 2018, which will allow the Fed to increase interest rates from 0.5% now to a still-low 2.0% by the end of 2018. All this good news is a result of Trump’s stimulus plan, which he sees as Supply-side and which the OECD sees as Keynesian.
Elsewhere, it projects slightly slower growth in Britain and China. The euro zone growth will only increase from 1.6% this year to only 1.7% next year. The difference between them and the U.S. is that gridlock has ended in the U.S.! In other words, change has come to America . . . I hope!
My Prediction: The OECD will be laying a major guilt trip on the United States in the near future to increase foreign aid.