Good Current Macroeconomic Situation In The U.S Essay Example
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The present macroeconomic situation in the US is worrying to many citizens. On June 2012, the rate of unemployment was at 8.2% as while the average from 1948 forward was around 5.7%. However, the rate of inflation is roughly 2.3%, which is 1.5% worse than the previous average rate of 3.38%. Despite this economic data, it’s as like the dollar buys less and less as days pass.
According to Trading Economics, “The Gross Domestic Product (GDP) in the United States rose by two percent in the third part of 2011 over the previous quarter. Factually, from 1947 to 2011 the average quarter of United States GDP Growth was 3.28 percent realizing an historical increase of 17.20 percent in March of 1950 and a record decrease of -10.40 percent in March of 1958.”
The government should employ an expansionary fiscal policy, using currency to upsurge the liquidity in the system. Despite that, they should take care not to do much of this, as a lot of money in circulation will make the value of a dollar to go down. The existing descending trend for interest rates should be used to help to develop the economy; however, loans are not accessed that much hence lowering the rate of interest has little effect if businesses that need capital can’t access loans. The FOMC (Federal Open Market Committee) is trying to awaken the economy through purchasing treasuries printing money.
Despite all these approaches, the debt is increasing and the government will have to figure out how to handle debt ceiling. Although the FOMC is utilizing “easy money” tools, there is a slow change to reduce unemployment and get credits flowing once more. Tax breaks for big retailers and the rich that give enticements to create employment and encourage the growth of small business could help get the US economy come into life again. However, this would be costly since it hurts the middle class, which is disastrous to politicians.
Beechey, Meredith J.; Johannsen, Benjamin K.; Levin, Andrew T. Are Long-Run Inflation Expectations Anchored More Firmly in the Euro Area than in the United State? American Economic Journal: Macroeconomics, Volume 3, Number 2, April 2011, pp. 104-129(26)
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