Good Example Of Research Paper On The US Economy

The US Economy is one of the largest economies in the world. In recent times, the economy has seen a level of turbulence that was hitherto unseen. This paper would cover the latest information on various economic metrics with respect to the US economy such as GDP, inflation and unemployment rate.
GDP or the Gross Domestic Product in the US context is simply the value of the production of goods and services in the United States, adjusted for price changes. The GDP for the US increased at an annual rate of 2.2 percent in the fourth quarter of 2014. (BEA 2015) However, one must note that this growth rate was less than estimates by economists (2.6%) who were much more optimistic based on strong household sentiments and contracts for purchasing new homes. (Stilwell) The downward GDP revision primarily took place based on smaller gains in stockpiles and widening trade gap. The increase in real GDP in Q4 reflected the robust contributions from personal consumption expenditures, commercial fixed investments, state and local government spending, exports, private inventory investment, and residential fixed investment. All these positive aspects were partly offset by a negative contribution from federal government spending. The boost in consumer spending has occurred primarily due to the fall in global crude prices, which was largely unexpected. As stated, Imports, which are a subtraction in the calculation of GDP, increased, thereby decreasing the net GDP figures. Real GDP increased 3.3% in Q4 as compared to 4.1% in the previous quarter. Therefore, Real GDP increased 2.4 percent in 2014 (that is, from the 2013 annual level to the 2014 annual level), compared with an increase of 2.2 percent in 2013. (BEA 2015) In sum, the acceleration in overall real GDP growth in 2014 primarily reflected an acceleration in nonresidential fixed investment, a smaller decrease in federal government spending, and accelerations in PCE, in state and local government spending, and in private inventory investment that were partly offset by an acceleration in imports and a deceleration in residential fixed investment.
As far as inflation is concerned, a rising GDP is contrasted by a falling inflationary trend. The CPI – U (Consumer Price Index for All Urban Consumers) declined 0.7 percent, on a seasonally adjusted basis, in January. Over the last year, the all items index decreased 0.1 percent before seasonal adjustment. (BLS 2015) The primary factor in the falling inflation would be the decrease in petrol prices by as much as 18.7% since January, followed by the energy index that fell by 9.7%. The energy index fell 19.6 percent over the span, with the gasoline index down 35.4 percent. The food index rose 3.2 percent, and the index for all items less food and energy increased 1.6 percent. (BLS) In the absence of this decrease, the inflation would have risen by 0.1%. Despite a falling inflationary trend that is reminiscent of a deflation, economists feel that the US economy is robust since falling inflation data is coupled with a rising GDP and consumer demand. (Walker 2015) However, the direct impact of this inflationary figure is affecting the ability of the US Federal Reserve to increase interest rates. The US Fed expects the inflation to rise in the following months, since the Fed feels that this trend of falling prices would be short-lived. However, if this does not happen, the Fed would have to consider other measures.
Both the GDP and the inflation rates have an impact on the unemployment trends as well. The total nonfarm payroll employment exceeded expectations by registering an increase of around 295,000 in February, and the unemployment came down to around 5.5% with the number of unemployed persons standing at 8.7 million persons. (BLS, 2015) This figure is almost a percent less than the unemployment figure about a year ago of about 6.8% as compared to the present figure of 5.5%. Most of the employment increase occurred in food services and drinking places, professional and business services, construction, health care, and in transportation and warehousing. These gains were pared by the mining sector, which was down over the month. However, for a corresponding rise in the employment numbers, the wage numbers were disappointing since wage gains continued to lag, rising only 0.1% in February after a reported 0.5% increase in January, for private-sector workers. (Searcey 2015) The job growth indicated a heavy concentration in the service sector, with the tourism services industry, adding 66000 jobs, followed by the education and health sector, adding another 54000 jobs. The construction sector added 29000 jobs in February, while manufacturing increased by a modest 8,000. Similarly, gains also occurred in professional services and the trade and transport sectors. (Searcey) The labor participation rate fell slightly from 62.9% to 62.8%, during the same period. However, the grim wage scenario indicates that the economy is still far from its full performance potential since the average American has been left behind in the recovery due to stagnant wages. Although, data shows that the American economy is on the road to recovery, the average American is not convinced since a large number of potential workers are detached from the job market. To make matters worse, those job seekers who do get jobs end up in positions that classify them as underemployed. Such job seekers are not included in this data.
In conclusion, one can understand that the US economy is seeing a relatively strong GDP growth, coupled with a negative inflationary (or deflationary) trend. While economists feel that the deflationary trend would sort out in the face of a rising GDP and a robust consumer demand, a sustained deflation can seriously hamper the economy. Further, as far as unemployment trends are concerned, one can clearly see the fall in unemployment over the last one year with as much as a full percent fall in unemployment, although the economy is yet to achieve full employment. However, wage growth still remains a prime concern. If one looks at the overall picture, one can understand that the US economy is doing relatively well as compared to the situation a couple of years ago, but has not achieved its full potential. This is primarily due to the falling inflationary trend, coupled by a worrying wage growth scenario. Considering these points, one can say that barring certain factors, the US economy seems to have a near-term positive outlook.

Works Cited

Bureau of Economic Analysis. National Economic Accounts. BEA, 27 Feb 2015. Web. 5 Mar 2015.
Bureau of Labor Statistics. Consumer Price Index. BLS, 26 Feb 2015. Web. 5 Mar 2015.
Bureau of Labor Statistics. The Employment Situation – Unemployment Statistics. BLS, 6 Mar 2015. Web. 7 Mar 2015.
Searcey, Dionne. “After a Bounce, Wage Growth Slumps to 0.1%.” The New York Times. 6 Mar 2015. Web. 7 Mar 2015.
Stilwell, Victoria. “Upbeat Consumers Propel U.S. Fourth-Quarter Growth.” Bloomberg Business. 27 Feb 2015. Web. 5 Mar 2015
Walker, Andrew. “US Inflation rate remains negative.” BBC Business. 26 Feb 2015. Web. 5 Mar 2015.