Understanding the Performance of the US Economy

¶ … Macroeconomic Situation in the U.S.

Various macroeconomic components can be used in evaluating the performance and health of an economy. Some of the essential parameters include the GDP, the rate of inflation, the unemployment rate, the money policies/tools adopted by the government, and the interest rate among others. The following study focuses on the performance and state of U.S. economy in 2015.

GDP

economy is now on the rise and in good shape after going through the global recession of 2008/9. Some of the major indicators of growth are on the GDP value and the impact on industrial development. The current value of 17419 (in USD Billion) is the highest in American history with an annual growth rate of two percent. A growing economy is normally associated with rising level of inflation. However, this has a negative influence on the welfare of the people and thus the need to have corrective measures in place. The high GDP has also contributed a lot to high levels of per capita and income levels (Chafuen, 2015).

Unemployment Rate

The unemployment level in the country has been increasing since the Obama administration took office. After the recession in 2008, the government has been releasing good statistics showing high employment rates, especially in the private sector. The trend has been the same since the 1970s. The country's labor laws have had to be relaxed to attract foreign workers to come to the country. The challenges of unemployment are related to people's choices and less on economic performance. As a result, some qualified and eligible employees are under the unemployment benefits program (BEA, n.d.).

Inflation

The inflation rate has been increasing in the recent past. Ideally, the improvement in the economy has expanded other variables of growth. The average rate of inflation in the country is read at 5.5% currently. The consequences of this are that the investors are likely to lose the value of their investments. Besides, people are likely to experience a costly life because the prices of goods are going to rise higher than when the inflation was lower. The future of the country lies in the ability of its leadership to put measures in place that will stop inflation (BEA, n.d.).

Expansionary Fiscal Policy Tools

The U.S. government has been undertaking expansionary fiscal policy tools to boost its economic growth. This involves the utilization of all possible avenues of growth so that the economy can grow to such levels that cannot be reversed. In the expansionary policy, the government has chosen to utilize government expenditure as a way of increasing the amount of money in the economy. The reason for this is that the economy needs a surplus amount of money in circulation to boost its chances of recovering from the recession (Congressional Budget Office, 2015).

FOMC

This refers to the Federal Open Market Committee. It is the committee composed of 12 remembers that set interest rates for the country. This role is important in setting out the platform on which the country is going to be guided. This role is important in controlling the investment trends as well as the earnings that are going to be made. By fixing the interest rates high, committee will restrict borrowing. The contrary happens when they fix the interest rates low. The country's economic performance dictates these actions (Congressional Budget Office, 2015).

Easy Money Policy Tools