Since 1970, the economic growth in U.S. had increased in real terms at a rate of 3.16% per annum, up to 2001, when the American economy registered a slow down period and the economic growth amounted 1.7%. Since 2003, the growth rate averaged 4.62% per annum. Currently, the economic growth is heavily influenced by fiscal relaxation policy that led to increased investments and economic growth level. The average return rate on investment was of 14.6%, especially in the computer software and telecommunication sector.
The U.S. Labour Statistics office gives the data on the employment situation of the American society. This is important due to the fact that a high level of unemployment depicts the situation of a possible recession, while a low level of unemployment indicates that a certain nation cannot provide staff for the interested companies, and the labour force is insufficient for the demand on the market.
September 2007 is the 49th consecutive month of unemployment reduction, breaking record after record for the employment indicators. The value in 2000 was of 3.8%, as compared to the unemployment rate of 2007-4.7%. The active labour force of the United States of America is of 151.4 million people, including the unemployed, meaning that the American society is composed of approximately 130 million people are retired or under-aged.
If we regard the labour force by occupation we might see the trends of job-seeking within the American society. So, only 0.7% of the active population are employed in farming, forestry and fishing, 22.9% in manufacturing, extraction, transportation and various crafts, 33.9% in managerial, professional and technical field, 25% in sales and office administration, while another 16.5% have jobs in other types of services.
The inflation rate is an important macroeconomic indicator, especially from the corporate and population's point-of-view. The predictability of the purchasing power is very important for individuals, as they need to know what they could acquire in the future with the current wage and income. Also, the profits of corporations are influenced by the economic phenomena of inflation - that reduces and limits the real growth registered by that particular company. The inflation rate in 2000 was of 3.38%, and in 2007 of 3.24. This means that the prices indices have slightly decreased, mainly due to competitiveness and reducing pace of consumption.
From 1992-2000, the markets and the overall economy experienced a period of record expansion - on 1st of September 2000, the NASDAQ traded at 4234.33 while in January 2, 2001, the NASDAQ dropped 45.9%. In October 2002, the NASDAQ slumped to as low as 1,108.49 - a 78.4% decline from its all-time high of 5,132.52, the level it had established in March 2000. In trying to explain the causes of the financial crash we might come up with the following elements:
Corporate Corruption. Many companies reported a higher profit level than the actual ones, using accounting loopholes. Corporate managers used unwise stock options that reduced to a great extent the price of that securities
Overvalued Stocks. An important number of companies incurrent significant operating losses without no profit horizon, but with a capitalization of billion of dollars;
Speculators and Momentum Investors. The introduction of Internet into security trading led to emergence of million of inexperienced investors, that traded based on instinct, and not on real facts.
Federal reserves and Money Market
Federal Reserves, the U.S. Central Bank, closely watches over the data on money supply and induces a particular money supply growth according to its moment needs. In the past two decades, a number of developments have broken down the relationship between money supply growth and the performance of the U.S. economy. In July 2000, the Federal Reserve had renounced at setting a target for the money supply growth and in March 2006, the Board of FED Governors ceased publishing the M3 monetary aggregate.
The perspectives on the U.S. economy differ among the inquired specialists. Some argue that the recent mortgage crises would affect the overall performance of the American economy, and therefore the macroeconomic indicators under discussion. Also, the increasing international economy may danger the position of America on the national and international market - Japan, EU and China. Other opinions consider that Government intervention and support, through Government expenditure, would be an essential development of the U.S. economy.
At this point, there is also a chance of recession, which is why the Federal Reserve decided to decrease the interest rate with 0.5% to 4.75% in hope of stimulating
1) Official Federal Reserve's website: http://www.federalreserve.gov/,Retrieved date: 10th of October
2) the Bureau of Economic Analysis website:
www.bea.gov, retrieved on 9th of October
3) National Bureau of Economic Research Website: http://www.nber.org/,retrieved on 10th of October…