Question

speculate about where you think we are headed with our economy

Have fun, use what you know...and let's have a real discussion! Try to touch on all the aspects of our goals: Full-Employment (5% or lower Unemployment Rate), Price Stability (2 - 3% Inflation Rate) & Economic Growth (3% Real GDP increase annually) to predict where the US Economy is tracking with all three. Make as educated a guess as possible to indicate where you think we are headed, and then give your rationale for the points you are making!

Answer 1

Currently US economy is doing good in terms of economic indicators, i.e. March, 2018 unemployment level of 4.1%(desirable rate which is lower than to 5% of unemloyment level ,which supposed to be full employment level.

Real GDP of 2.9% for 2017 which is near to 3% real GDP and shows good economic growth and inflation rate of 2.4% in March,2018 which is within price stabulity target.

Total nonfarm employment increased to 200000 in January,2018 and last updated unemployment level is 4.1% which shows people are employed and increase in demand for goods and services and also new one's are demanding for new homes and this is increasing growth in Real Estate sector but will slow pace and another concern is rising real estate/home rates.

GDP level of 2.9% for 2017 is showing economic growth and showing increasing level of production of goods and services and increased employment level and addition of new jobs is showing increased spending and increased demand for goods and services.

Announcement of increased spending and tax cuts by Donald Trump's administration will also boost the US economy and will increase the employment level, purchasing power of people, increase in production of goods and services and will also increase in demand for raw material by companies and goverment both and also demand in terms of increased consumer spending.

Federal's funds target rate is still at level of 1.75% and low enough to increase demand for loans which will have positive economic growth in terms of increase in employment level/new job creation, increase in production of goods and services and increased spending.

Future prospects- But slow growth wage growth, wage stagnation, high level of current account and budget deficit, income inequality is still holding US economy to gain its full potential.

Slow growith in Real Estate market is also a major cause of conern and on the other hand real estate prices are on rise and this is causing real estate growth negatively.

Recent US administrations announcement of impostion of tariifs of USD 50 billion on China and on imports of aluminium and steel and possibility of another USD 100 billion of tariff's on China's import can harm US economy because first these measures will be retaliated by CHINA and other countries and second US people won't be able to get cheaper products and this will cause them increase in their spending on the same quantity of products due to high rates of similar products availale locally and decrease in people's saving and and decreasing in their purchasing power.

One more reason is worth noting that US consumer's are reluctant in spending against their savings with respect to fall in oil prices.

As of now US economy is in good shape and all economic indicators are showing positive outlook but future is showing some issues as well and it requires US administration to take cautious measures to maintain this momentum and rethink its protectionist policies since in long run it won't benifit but can have negative impact on the US economy and economies world over.