Good Essay About Economics

The Current Macro-economic Situation in the United States

The Current Macro-economic Situation in the United States
The macroeconomic situation in the US centers on the behavior and trends of the aggregate economy of the country. An analysis of the macroeconomic situation evaluates the large-scale phenomena of the economy such as unemployment, the rate of change in the national income, gross domestic product, inflation and the gross national product. According to the Bureau of Labor Statistics, there was an increase in the total non-agricultural payroll employment by 126000 new opportunities offered to job seekers. Unemployment refers to the inability to get any opportunity for employment for people who are willing and able to work and contribute to the active factors of production.
In March 2015, the Bureau asserts that the rate of unemployment remained unchanged at an average of 5.5 percent. The same figure was also recorded in February. The number of people who are seeking employment actively remain unchanged in the first quarter of 2015 at an approximate value of 8.6 million people. The following graph illustrates the changes in the unemployment rates in the USA since 2005. Since 1948 to the end of 2014, the country’s average rate of unemployment 5.7 percent. As such, the current rate is lower than the average of nearly 60 years. The nation should be concerned about unemployment because the rate at which it is reducing is lower than the rate at which people will be seeking jobs in the future.
As the country awaits the first quarter of 2015 to assess the new quarterly gross domestic product, the data on the GDP in 2014 reflects the current macroeconomic situation. In the final quarter of 2014, the value of the final services and goods produced in the United States (GDP) increased by 2.2 percent. In the third quarter of the same year, the GDP rose by 5 percent to an approximate value of 272 billion dollars in 2014. The government does not have to be worried about inflation given that that the rate of inflation was zero percent in February and March 2015. Currently, an economic recess is not imminent as the economy has just recovered from the economic meltdown experienced at the beginning of 2008 (Dell’Anno & Solomon, 2008, p. 10). The fiscal policies adopted in the previous economic recession are still functional, and they will help in the case where an economic recess is inherent today.

Appropriate Fiscal and Monetary Policy for the US Today

The US faces the fiscal challenge where it must confront the high rate of unemployment by accelerating the level of recovery from the previous financial crisis. At the same time, it must maintain the rate of inflation at zero to prevent the escalation of prices in the market. Currently, the country has a budget deficit of nearly 1.5 trillion dollars. The expansionary fiscal policy will help to combat any recessions and address the issue of unemployment. In this policy, the government increases the domestic taxes collected from the market while increasing the government expenditure. Assuming that the economy is already at its level of natural GDP, the government triggers the crowding out effect through incremental borrowing (Cukierman & Dalmazzo, 2006, p 12). Crowding out increases the growth of the public sector and creates more job opportunities although private firms have to deal with harsh market conditions to survive in the market. The government should also decrease the money supply to the market to ensure that inflation remains a zero.

References

Cukierman, A., & Dalmazzo, A. (2006). Fiscal-monetary Policy Interactions in the Presence of Unionized Labor Markets. International Tax and Public Finance.
Dell’Anno, R., & Solomon, O. H. (2008). Shadow Economy and Unemployment Rate in USA: is There a Structural Relationship? An Empirical Analysis. Applied Economics.