Describe the State of the American Economy Over the Past 2 Years (Research Paper Sample)

The American Economy over the last two years
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The state of the American economy
According to the president's report on the state of America's economy released in February 2015, America has registered the largest percentage job creation since early 1990’s. The country has successfully been on the course of recovery for the past two years from the impact of the global economic crisis. The plunging rate of unemployment has been faster in the last six years than what the economists had predicted. America has cut down its dependence on imported resources like oil this has been possible through the increased investment in renewable energy that has substantially reduced the metric tons of oil imported. For the year ending 2014, America had taken the lead in the entire world in the wind power, oil and gas investment (Allcott&Wozny, 2014). The paper is a discussion of how the American government and the Federal Reserve policies have been successful in running the American economy.
The Gross Domestic Product
In the year 2014 the US Economy took another twist in its recovery process after the great depression during the economic crisis. The U.S GDP has experienced growth at an annual rate of 2.8 % over the past two years. This pace in growth was reported to be up from the 2.0 % registered in the year 2012. However, the growth was uneven through 2014 due to different factors. Firstly the cold and snowy weather at the beginning of 2014 attributed to the drop of the GDP, the 2.1 % annual rate was the worst recorded in the year. Advance estimates depict a positive rebound in the economy in the second and third quarters, a period that the GDP was at its peak that is a 5 % annual rate (Lebergott, 2015).
The Federal Reserve’s comfortable adoption of conventional policies has been good news to the economy’s progress. The role of the Federal Reserve is to set the monetary policy of the nation to meet the government objectives. The policy promotes such objectives like maximizing the employment rates, creating stable commodity prices as well as having moderate long-term rates. The nation has recorded a rapid drop in the employment rate in the recent past. Unemployment status took a different shape in the year 2014, contrary to the early projections in 2013; the unemployment rates fell below 5.6%. By the end of 2014 the private sector had created 11.5 million job opportunities in a period of 59 months, which is on record as the longest streak of uninterrupted job growth (Walton & Rockoff, 2013). According to the president’s report, there was a 1.1 % decline in the unemployment rate across the 12 months of 2014. Real earnings per hour of production also rose 1.5% over the same year as the growth of the nominal wage continued to overcome the inflation of consumer price. Strengthening of the labor market saw the GDP grow by 2.5 % during the fourth quarter of 2014. It is very imperative to realize that there has been stability in the labor participation after the fall in 2013 which has been followed by a decline in the number of workers in part-time employment. 64 % of the overall unemployment status decline was attributed to the policy that reduced the rates of long-term employment. The number of job seekers per job vacancy now stands below 2.1 (Hammoudeh et al., 2014).
According to Kemp, (2014) the decline in the energy and import costs has facilitated the federation’s ease in watching the inflation rate. Inflation of the core consumer price has been steady at about a 1.7 % yearly rate for as long as the past two years. The general consumer price index (CPI) was lowered by the decreases in energy costs in 2013 and 2014, expanding only 1.5 percent and 0.8 percent amid the 12 months of those two years. The costs of food expanded quicker than general inflation amid 2014, incompletely mirroring the dry spell in California, with milk and meat costs swelling by about 13 and 4 percent respectively. Recent declines in the cost of imported petroleum have boosted the income of domestic consumers and also reduced inflation. Core inflation has also recorded figures lower than the Federal Reserve’s goal and there is still a projection for an upward drift in the inflation (Summers, 2014).
The American fiscal policy no longer drags growth in the economy. Increases in taxes and cuts in the government expenditure at the federal level in 2012 and 2013 significantly restrained the demand. The restraint occurred at a time that local governments and the state were also cutting back. However, there have been a better prospects going forward in that energy prices decline have added to the disposable income of households (Bernanke, 2014). These have resulted in a rise in the household and business confidence that have an impact on economy growth. The government has made it economic necessity for both parents in a family to be working. High quality and affordable healthcare are a must have as well. The president proposed early in the year that the maximum child tax credit per annum be tripled to about $ 3,000 per child (Bernanke, 2013). The government also has ventured to create more openings in childcare programs in 2015. America is the only country on the globe that workers are not guaranteed paid sick or maternity leaves. As opined by the president, the state is gradually adopting paid leave laws. Taxes on working families have been lowered and the ownership of homes made possible since the mortgage premiums are now reasonable. Numerous factors have fallen behind such improved performances. The lender and borrower sheets have gradually come in a better shape, and credit flow to most sectors has been made smooth and at low-interest rates. The increase in the equity and house prices has contributed greatly to the improvement in the h...