Question

What is the current state of the US Economy in the last 20 years?” Your report should include the following: GPD, unemployment, inflation and Labor Force Participation Rate. Include a general statement about the state of the economy and then brief commentaries on each of the measures. You can use FRED graph for your comparison

Answer 1

The economy appears to have continued to diverge down two separate tracks in the third quarter. On the one hand, strong retail sales in August and higher monthly wages in the same month affirms consumer spending continues to do the heavy lifting in Q3. On the other hand, businesses investment has likely weakened amid the persistent trade dispute with China, while the ISM index notably slipped into contractionary territory for the first time in three years in August, raising concerns of a manufacturing downturn.

Economics panelists see GDP expanding 2.3% in 2019 and 1.6% in 2020, which is down 0.1 percentage points from last month’s forecast.

The Unemployment rate has fallen considerably from 7.4% in 2013 to 4.4% in 2017. While the Inflation rate has risen to 2.1% in 2017 from 1.3% in 2016.

Despite facing challenges at the domestic level along with a rapidly transforming global landscape, the U.S. economy is still the largest and most important in the world. The U.S. economy represents about 20% of total global output, and is still larger than that of China. Moreover, according to the IMF, the U.S. has the sixth highest per capita GDP . The U.S. economy features a highly-developed and technologically-advanced services sector, which accounts for about 80% of its output. The U.S. economy is dominated by services-oriented companies in areas such as technology, financial services, healthcare and retail. Large U.S. corporations also play a major role on the global stage, with more than a fifth of companies on the Fortune Global 500 coming from the United States.

Interest rates were initially supposed to be kept low only until the unemployment rate dropped to 6.5% or inflation surpassed 2.5%. However, this specific forward guidance was revamped in March 2014 when the Fed announced that any future decisions to hike interest rates no longer depended on previously-established quantitative thresholds.

Deteriorating infrastructure, wage stagnation, rising income inequality, elevated pension and medical costs, as well as large current account and government budget deficits, are all issues facing the US economy.