Retail sales will continue to grow in 2012 while

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Unformatted text preview: inue to grow in 2012, while price increases will remain below 3%. The fact that overall inflation remains in check understates the consumer-affecting price changes in some important purchase categories, primarily food and fuel. Fixed Investment Fixed investment includes investment in residential structures, as well as nonresidential structures, equipment, and software. In 2011, about 81.5% of real investment was business-related. Nonresidential investment grew at 9.1% and is expected to increase 7.4% in 2012. Government Expenditures About 58% of total government expenditures are at the state and local level, roughly 28% are allocated to national defense, and 14% to nondefense programs. With ARRA spending coming to an end, government spending is anticipated to decline 1.9% in 2011 and 0.6% in 2012. The federal budget deficit is projected to remain unsettlingly high at $1.3 trillion in 2011 and fall to $1.06 trillion in 2012. Spending cuts and domestic austerity measures are needed, but cuts in the short term will also mean a slower overall recovery due to fiscal drag. Net Exports The United S...
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