Current Macroeconomic Situation in U.S. (Essay Sample)

Current Macroeconomic Situation in U.S
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Current Macroeconomic Situation in U.S
The current macroeconomic situation in the U.S has shown various trends and outlines that have a significant impact on the key macroeconomic factors. These include unemployment, inflation, and recession (Mankiw, 2011). In addition, the U.S government is occupied with different economical reactions meant to deal with the adverse macroeconomic situation in the country. These reactions include expansionary fiscal policy, FOMC, easy money policy tools, and increasing the growth in GDP.
The first quarter of the year 2012 has registered the decrease and end of the recession period in the U.S. The recovery has been boosted by private consumption. This has resulted to a gradual growth of the economy (Hill, 2012). However, the economic growth is registered as sluggish from the effects of the recent recession. Unemployment is a significant sector of the economy that has indicated positive trend in the first quarter of the year 2012. However, according to economics experts, job creation is still under the threshold level of 300,000 new jobs per month to cause a significant impact in the job market (Hill, 2012).
In addition, inflation trend shows the rise or fall in the purchasing power of the U.S prevalence. In the first quarter of 2012, the level of inflation was 1.4% as compared to 3.9% in the last quarter of 2011. This shows a gain in the supremacy of the U.S dollar over the other global currencies thus a rise in its purchasing power. The FOMC asserted that this inflation level is close to the expected level of 2%. FOMC is responsible for the control of open market operations.
The U.S economy was hit by a crisis in the year 2007-2008 causing significant recession. However, amid numerous adjustments in the macroeconomic factors, the country recovered. This is amid speculations by policymakers that due to the job crisis, financial sector fragility, and sovereign debt distress, another recession is likely to occur in the US. In addition to these factors, the country is experiencing a considerable weakness in aggregate demand due to the impact of high employment levels and the fiscal severity measures. The policy paralysis resulting from the current political standstill and other institutional deficiencies has led to recession vulnerability of the U.S economy.
Under the monetary policies, the U.S government through the Federal Reserve Bank (Fed) implements the interest rate policy. This entailed the lowering of the policy rate to near-zero. In this case, the Fed maintains the federal funds interest at a level between 0.0% and 0.25%. This value is expected to be sustained to the year 2013 (News Releases, 2012). Lowering the short-term interest rates is an indirect tool used to implement the U.S monetary policy to control inflation and GDP growth. This has resulted to low nominal and real interest rates leading to higher yields. The policy is appropriate for the country’s economy because it boosts the output (News Releases, 2012).
Under the fiscal policies, the U.S government proposes to enact the American Jobs Act that proposed payroll tax cut and the emergency unemployment compensation. This is meant to work towards the long-term deficit-reduction actions expected to show results by 2013. However, U.S is experiencing fiscal policy turmoil amid the political pressure to stabilize the divers...