What is the “current macroeconomic situation” in the U.S Answer

What is the “current macroeconomic
situation” in the U.S. (e.g. is the U.S. economy currently concerned about
unemployment, inflation, recession, etc.)? What fiscal policies and monetary
policies would be appropriate at this time? 

1. Write your individual answers to the questions listed above together in
essay format (minumum of 300 words combined in APA style), using correct
economic terms covered in the discussions. If you only write 300 words, you
probably won’t be able to fully answer the questions. Use the APA Format.

2. Key concepts to include in your paper–data trends on unemployment,
inflation, GDP growth, expansionary fiscal policy tools, FOMC, easy money
policy tools and other terms from this class. 

3. You must use at least one article.

GDP , accessed on 13 Feb 2013, available at http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&910=X&911=0&903=1&904=2010&905=2012&906=A

Current
US Inflation Rates: 2002-2013, accessed on 13 Feb 2013, available at http://www.usinflationcalculator.com/inflation/current-inflation-rates/

The current economic situation in uSA is that it is trying to
get out of the recession that started in 2008-2009. The biggest challenge has
been the high rate of unemployment that still stands at 8.6%. Inflation is not
such a worry, as it remains low at around 2%. GDP is also showing some signs of
revival. In 2012, the quarterly growth rates were 2%, 1.3%, 3.2% and -0.1%. The
decline in Q4 is attributable to slashing of government spending as part of
Federal military spending. The overall rates stands at 2.2%, higher than 1.8%
for 2011, but marginally lower than 2.4% for 2010. In this sense the economy is
recovering, albeit slowly.

Behind this recovery is a series of monetary and fiscal policy
measures that has been undertaken since 2009. The FED and FOMC have kept rate
of interest near zero, along with a low inflation rate that is below 2%. The
FED has also increased money supply through its Quantitative Easing programs
continuously. On the fiscal side, government increased its spending
continuously till the fiscal deficit reached record highs in 2010. This
partially explains a higher inflation rate as well as a higher GDP rate for
that year. Such fiscal programs include

• A package worth $158 billion that involved tax cuts signed by President George W. Bush in early 2008;
• ARRA bill worth $787 billion bill was backed by Obama in 2009in order to stave off the crisis
• An agreement on tax cuts and unemployment fund extension in 2010, under the American Jobs Act.

If we were to look ahead, we can argue that USA needs support-fiscal and monetary to strengthen the recovery that remains weak, as European Union problems continue. USA needs easy monetary policies, which allow low interest rates and easy availability of funds for investment and consumption. This would send a signal that the government is firm on supporting the revival, and this is expected to boost business morale and confidence. On the fiscal side, an expansionary position runs the risk of large fiscal deficits that are unwelcome. Instead, revenue generation (with higher taxes on richer section of society) and careful and productive spending is the need of the hour. Any spending must be monitored in terms of no of jobs created and the usefulness on the spending. To summarise the support must be continued, but with more care and attention to the results.

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