Current Macroeconomic Situation

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Current Macroeconomic Situation

Introduction

While the economy of the US has been very vibrant, there are many indicators to show that the country’s economy is on the downturn. For one the vital economic statistics show that the country most important sectors are either in a very bad shape. For example, the government debt and the corporate debt is almost 360% of the country’s GDP. THE Colossal manufacturing base is almost nearing closure. The country is also stil reeling from the effects of the worst debt bubble followed by the financial crisis of the wallsteet.

Unemployment

According to Geffen, (2008), the country’s unemployment rate is worrying as the number of the civilian who are not in gainful employment in ever increasing, for example, the country’s bureau of labor statistics shows that the real unemployment for t economy and the increasing unemployment in the country. However, there is a significant relationship between unemployment and the economy. It is therefore healthy to say that the rate of unemployment may not reduce significantly unless the economy recovers; the country official rate of unemployment is 9.1%.

Figure SEQ Figure * ARABIC 1

Inflation

The country is also concerned about the rate of inflation in the country based on the current statistics showing that the current 3.2% increase in the general CPI of the country. This is alarming to the federal government because the increase in the prices of gas and oil has a ripple effect on the country’s fertilizer and transportation const that later translates into a further increase in the country’s food prices. This percentage increase in the general price of commodities in the country has a negative impact on the general economic climate in the country forcing the country to be concerned. However, it is quite open that the federal government is less concerned about the volatile prices of commodities, but is more concerned about the latest core inflation rates that are currently 1.3% above the target set by the fed (Geffen, 2008).

Recession

The country has experienced two quarters of economic decline on a number of occasions. In addition, the government is reacting to this economic decline in a number of ways, for one, the federal government printed more money. The country also instituted monetary easing to solve the country from recession. The government has also instated fiscal policies to promote growth in the country. The fed has also tried to stimulate jobs by institution an economic recovery plan, increasing job through outsourcing as well an attracting foreign investments into the country. Other includes financial regulation and intermediation.

Measures

There are several measures that the US government can implement to contain or stop the economic problems. These ranges from increasing the amount of money in circulation, and boosting the general per capita disposable income. However, if the government could consider reducing the per capital debt level while at the same time balancing the interest rates. The economic woes can be contained. On the other hand, the Keynesian economic argue that creating a conducive environment for business is also important as it attract foreign and domestic investment into the country. Some of the activities that the country has achieved include encouraging the importation of high end commodities to impose a repealing tax on them.

Reference

Geffen, D, (2008). “Recession Puts Halfway Rule to the Test”. The Wall Street Journal.