U.S Economy

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The Current Macroeconomic Situation
Crystal Loveday
Devry University
ECON 312: Principles of Economics
Summer B, 2011

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Introduction
The current macroeconomic situation in the United States of America according to the article Economy in the United States that it is the world’s largest national economy, but has been going through a shaky economy. In 2010 the nominal GDP was around $14.7 trillion dollars. It also is a very high output when looking purchasing capita. The U.S. is one of the largest trading nations in the world with its three largest partners being Canada, China, and Mexico. According to CNN Money.com since there has been financial troubles in the past years, and the U.S. has been hitting stumbling blocks, unemployment, lack of jobs, and possibly facing a double dipped depression things are starting to look up in certain areas. In the current month of October Medium sized businesses, with payrolls between 50 and 499 employees added 36,000 jobs in the month, while the nation’s largest businesses shed 5,000 jobs. According to the CNN article most of the jobs were added in the service-producing sector. In the larger sector they are predicting even more job cuts with larger business including government cut backs such as 51,114 military positions. Banks also are forecasted to have a large amount of jobs lost with 31,167 cuts announced ion the month of September. So even though the United States economy is supposed to be the World’s largest national economy the outlook at this time is very shaky and bleak. People are very hesitant to invest, and are hanging on to any money that they have. People are in fear, and can’t afford to lose money in this time of a shaky economy.
Unemployment Concerns The labor force is defined as the number of people employed plus the number unemployed but seeking work. When studying the overall macroeconomics there are several types of unemployment that have been identified. Frictional unemployment which looks at the time they give to people to find and settle into new jobs. The second is Structural unemployment which looks at employer’s skills verses jobs available in that certain trade. Last is Natural rate of employment which is the sum of frictional and structural unemployment. The last reported unemployment rate was 9.1% in August of 2011.
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According to the article United States Unemployment Rate giving information on trends on unemployment from the year 1948 until 2010 the Average was 5.70, except it reached a record high of 10.80 percent in November 1982. This shows that are unemployment rate is very high at this time. Which greatly affects the U.S. economy? If people do not have jobs, therefore they are not making money to spend and do not have purchasing powers to keep the economy at a rise. If the number of larger business keeps lying of more people in months to come the economy is only going to worsen. At this current time fields like healthcare are on the rise when government employment continues to plunge. The number of unemployed people reported in the month of August was at an estimated rate of 14 million. The major groups of unemployed are adult men at 8.9%, adult women at 8.0%, teenagers at 25.4 %, whites 8%, blacks 16.7%, Asians 7.1% and Hispanics 11.3%. The number that were reported on long term employment meaning jobless for more than 27 weeks and over was accounted for 42.9% of the unemployed. Part of this problem of people staying on unemployment for such large periods of time is many of the jobs have hired there standards in such a tight job market while lowering how much they want to pay. Some jobs which were higher paying, now pay minimum wage and many people receiving unemployment are making more than what some of these jobs want to pay. Not only to mention people who have college educations and degrees are graduating to find that there is no jobs, and there left with student loans in which they have no money because of the lack of jobs to pay them back. Markets in which had many job opportunities are now becoming slim, and competition is at its high while jobs are at its low.
Inflation
According to mainstream economics the word “inflation” is the general rise in prices compared against the standard level of purchases. It was referred to an increase in money supply, but is now said to be an expansionary money monetary inflation. It’s measured by taking two goods at a point in time, and computing the increase in cost by increasing the quality. Inflation in the United States is at 3.8% as of
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August 2011. From 1914 until 2010 the Average inflation rate has been around 3.8%, so it really has not changed much. According to the article in Trading Economics it explains that the definition of the inflation rate refers to a general rise in price measured against the standard level of purchasing power. The CPI measures consumer prices which us the most well known. The GDP deflator also measures the whole dome of inflation. According to charts the CPI-U which is the Consumer Price Index for all Urban Consumers has increased 0.4 percent in August on a seasonally adjusted basis. Over the last twelve months all items have increased. Increases are seen in areas of food, gasoline, shelter, and apparel. Some other noted inflation increases at this time include used cars and trucks, medical care, household furniture, recreation, tobacco, and personal care. This seems like it would be devastating if you look at the unemployment rates stated below. Unemployment is up, jobs are down, yet the inflation and cost of living continues to increase. This seems pretty scary.
Are We In a Recession?
If you ask this question “Are we in a recession?” to anyone in the United States, I believe they would say yes! With the unemployment rates close to all time highs, inflation rates increasing, spending decreasing. Our economy is near the low point of the Great Recession. In an article in The Blaze called Business a Double Dip Recession in 2011 it explains that a growing minority of economists believe that there will be a double –dip recession. Meanings were already in a recession, it may get worst, and the stubbornly high unemployment numbers and rapidly faltering housing market is not helping. In 2008-2009 the recession was first triggered by a drop in housing prices, robbing people of their equity. As that disappeared so did the availability of loans and credit. Consumers buying powers decreased causing business to make cuts in inventory and production. Like a domino effect the jobless rates rose. The consumers’ confidence plunged. With 14 million out of jobs at this current time and a high percentage of this rate has been out of jobs for more than 27 weeks, causing them to loose unemployment insurance benefits in early 2012. Many will add to the worsening of the economy, loosing their houses, and not being able to have money
CURRENT ECONOMIC SITUATION 5 to spend to contribute to fixing the economy. Our Country is in danger of the double-dip part of the recession. The problems are forecasted to worsen on the near future. All of the credit lines have exceeded and there are no more cushions or backups anymore for Americans. Do to upside down loans, equity lines are near nonexistent, and consumer confidence are at all time lows when it comes to spending. So when asked if we are in a recession? My answer would be “yes”.
What Fiscal Policies and Monetary Policies are Appropriate?
According to Fiscal policy the economy could have the potential level of GDP that it may contain given the proper resources and technology. If the GDP remains stable then the full employment level can reach its output level. This right now, is the attainable goal for The United States. When we reach this level it means that all resources of the economy are being utilized. The unemployment and inflation at this present time needs to be controlled and the government can help playing a role to stabilize things. The tools that the government uses to try to stabilize the economy are taxes and control of government spending. Making changes to individual household’s personal taxes by decreasing them during this recession may increase disposable income at this time, giving consumers more money to spend to help increase the economy. With extra cash in people’s pockets they will be more apt to buy more, trying to stop the domino effect of the crumbling economy. Other ways to help in a recession is the government cuts taxes and increases government spending to stimulate the economy. Monetary policy happens when the government has a say or controls the supply of money, targeting the interest rate to promote financial stability and economic growth. At this desperate time in the United States this may be appropriate because it seems like there is not many other alternatives or choices for Americans to help bail them out of financial ruins. Interest rates must stay low at this time in a dangerous market to help increase with buying and economic growth.

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Conclusion
In conclusion even though are Country is still reported to be one of the top National Economies there are many obstacles in the current economy that need to be reassessed to keep that title. Our country is in financial ruins at this time. Houses are being foreclosed at record highs, unemployment numbers are at high rates. The job market is at a decline and jobs that seem to be on the incline require special qualifications. There seems to be a worsening domino effect from the loss of jobs, loss of money, and decrease in the economy that seems to worsen. Banks in the past have borrowed money at enormous amounts in which people were unable to repay; when the housing markets dropped so did equity causing an upside down housing market. Maybe at the beginning of the current recession the drop was not as bad in the economy because people were living off of remaining equity loans, but now there is no equity left. Our Country has depended too greatly on credit, or money that may not really be there, or ever paid back. Our Country seems to be in financial ruins and needs some sort of help and assistance. With confidence lost in the Government, banks, and large business America does not know who to turn to. Who has the answers to our problems? More loans from other Countries? While we are trying to bail out and help other countries with money we don’t have. Do we as Americans have much of a choice but to depend on our Government for help? Didn’t they help add to this problem with unnecessary spending? Americans are desperate and don’t really know how to answer these questions. All we can do is take the advice on our dollar bill “In God We Trust” and hope that our economy gets better.

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Works Cited
Adams, B. (2011). Business A Double Dip Recession in 2011. The Blaze , 1-5.
Amadeo, K. (2011, September). Retrieved October 6, 2011, from About.com US Economy: http://useconomy.about.com
Unknown. (2011). United States Unemployement Rate. Trading Economics , 1-10.
Wikepedia. (2011). Economy of the United States. Retrieved October 6, 2011, from Wikipedia Encyclopedia: http://en.wikepedia.org/wiki/Economy

Cited: Adams, B. (2011). Business A Double Dip Recession in 2011. The Blaze , 1-5. Amadeo, K. (2011, September). Retrieved October 6, 2011, from About.com US Economy: http://useconomy.about.com Unknown. (2011). United States Unemployement Rate. Trading Economics , 1-10. Wikepedia. (2011). Economy of the United States. Retrieved October 6, 2011, from Wikipedia Encyclopedia: http://en.wikepedia.org/wiki/Economy