In the last quarter of 2012, the macroeconomic situation was shaped by two major factors that has led to these current events. (CEB 2013) The two major problems is politics in particular, the debt ceiling and the fiscal cliff. The economic growth at the end of 2012 was -0.1 percent, which, “demonstrates the limitation of monetary policy in shielding the economy from short-run exogenous shocks” (CEB 2013). Even though the growth in 2012 had slowed down 1 percent, the economy has been improving since the downward slope in the economy. The U.S economy is currently not experiencing an inflation, and the major concerns over the economy falling into a slowdown is not a big factor on consumers and economists minds. The economy has been steadily improving.
The current macroeconomic situation in the United States is moderately up and down. Now with the government shut down, many in the economic community are reacting to the repercussions that this shutdown will have on the U.S economy. A possible slowdown in consumer consumption, spending, international trade, and the impact on the employees, military, and employees that were sent on furloughs. Other impacts include, the housing market that has been making a comeback, will slow down as mortgage loans are out on hold that effects condo purchases, new housing products, single family homes, and homeowners (Ausick, 2013). Looking at the economy inflation is not a real threat. Unemployment is not extremely high as it was in the past years, but it is also not the ideal number where experts or the public would like it to be. At a rate of approximately 7.6 percent it still needs to be improved on. While breaking it down further into different demographics that suffers are usually minorities and the youth whose unemployment rates are higher. The economy is still slowly recovering, which makes unemployment a real problem, there are over 12 million Americans still without jobs, and the jobs market is slowly adding jobs that are not low wage. The country is not in a recession, which would be evident in the past two quarters if the economic growth was declining. That is not the case for the U.S economy which for the past two quarters has experienced GDP growth at 2.5 percent. According to Trading Economics, the rise in GDP is due in part to the, “..upturns in exports and in nonresidential fixed investment, a smaller decrease in federal government spending, and an upturns in state and local government spending that were partly offset by an acceleration in imports and deceleration in private inventory investment and in personal consumption expenditure” (Trading Economics 2013)
Due to the instability in Europe, and the slow rate of growth it is easy for the United States to slip back into a recession which could be impact the unemployment rate, and consumer consumption negatively. The cause for inflation is usually caused by too much economic activity and low unemployment. Within the economy at this moment it is not a problem.
The current macroeconomic situation in the economy is not dire. The concerns of inflation and a recession while warranted is not a problem. Unemployment is still a problem with over 12 million people still out of work, a shutdown at this time is not ideal, and the number could potentially rise if the politicians are not able to come into agreement about the federal budget for 2014, that has impact on the economy that depends on federal spending. According to Ausick, market research has shown that an estimated $160 million a day is leaching from the U.S’s $15.7 trillion economy. (Ausick 2013). The GDP is expected to continue to grow thanks to exports, real personal consumption, and in the long run positive boosts in economy from energy and international investments. The short run sees fluxes in the economy due to the monetary policy, housing recovering, and the negatively from the rising healthcare costs, and the debt ceiling which uncertainty hurts hiring, investments, and the economy.
- Ausick, Paul. (2013). “The Economic Impact of the Government Shutdown-Day 2.” 24/7 Wall St. Retrieved from http://247wallst.com
- United States GDP Growth Rate. (2013). Trading Economics. Retrieved from http://www.tradingeconomics.com
- US Quarterly Macroeconomic Review and Outlook for Q1 2013. (2013). CEB. Retrieved from http://www.executiveboard.com