Current Macro Economic Situation in the U.S

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The United States is currently battling slow growth in its economy coupled by high rates of unemployment (McConnell, Brue, Flynn, 2011). Analysts insist that the economy of the United States is sinking (Mundi, 2012). However, the government is taking measures to restore it.

Although unemployment persists in the United States, the country has managed to create more than 100,000 jobs since January 2012. However, a deficit of more than 100,000 jobs still exists. In the United States 12.8 million people lack employment, and the rate of unemployment remains at 8.3 percent (Mundi, 2012).

The economy of the United States went into recession in 2007. Since then, the Bush and Obama administrations have done much to control job losses, and create more jobs. From 2009 to date, the government has released bailouts, and other programs such as tax credit aimed at economic stimulation.

The government reacts to recession through expansionary fiscal policy tools (McConnell et al, 2011). In 2009 the government pumped into the economy $ 787 billion as stimulus, but it failed to reduce the rate of unemployment.

This was followed by other similar packages, but they have been of little help. Because of recession, the rate of unemployment rose by100 percent in 2007.

In March 2012, it was at 8.2 percent then in April it dropped to 8.1 percent. In May 2012, it rose to 8.2 percent where it remained through June before rising by 0.1 percent in July (Mundi, 2012).

Inflation has been reducing since the beginning of 2012, but it still remains a problem. Throughout January and February of 2012, it was 2.9 percent. In March it dropped to 2.7, then to 2.3 in April, before stagnating at 1.7 throughout May and June (Mundi, 2012).

The Federal Reserve applies inflation rate targeting to curb inflation. It often reduces the amount of money in supply by selling government securities, and can announce a moderate rate of inflation agreeable to it.

Currently the core inflation rate is 2 percent. At the moment inflation is below this, but if it increases to more than 2 percent, the government will use the contractionary monetary policy to control it (McConnell et al, 2011).

Many people cite market failure as having brought about recession, because banks took so many risks and loans meant for expanding their profits. The crisis has persisted, due to wrong steps taken by the government.

For example, the Federal Government spent more than $ 1 trillion which was meant to go into stimulating the economy. Many people believe that stimulus packages caused negative effects on the economy of the United States, due to their bad design and execution. These packages have expanded the debt and deficit of the government (Perlo, 2012).

Growth in GDP for the American economy has been fluctuating with time. In the first quarter of 2012, the GDP grew by 1.5 percent from the previous quarter (Mundi, 2012).

Currently, per capita GDP is $ 48,100. The government is responsible for managing the growth of the economy. It achieves this through fiscal and monetary policy.

In conclusion, the focus of the paper is the current situation of the United States economy. The state of the economy has been bad since 2007; however, government efforts directed at inflation and unemployment are already bearing fruits.

References

McConnell, C. R., Brue, S.L., Flynn, S. (2011). Macroeconomics. New York: McGraw-Hill Companies. Print.

Mundi, I. (2012). United States Economy Profile 2012. Web.

Perlo, A. (2012). The U.S Economic Situation and the 2012 Elections. 2012. Web.

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Current Macro Economic Situation in the U.S

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