Question

Econ 2105, Macroeconomics Current Events Analysis Portfolio
Recent Macroeconomic Performance, Unemployment and Inflation:

Answer 1

In the wake of COVID-19 pandemic, US economy is facing recessionary effects and it is a very difficult time for the USA as its not only the aggregate demand that is down, but also it is the aggregate supply also, that is down as well due to the partial lockdown, focused upon very restricted operations of businesses that produce non-essential goods and services. It has started hurting the economy strongly in the recent months since April, 2020 and though there are slight improvements, but it is somewhat nothing to the problems faced by the US economy. It is vindicated by the fact that unemployment rate is 11.1% in June, 2020 that was 14.7% in April, 2020.  It is supported  by the lower level of inflation rate that is .6% in June 2020 that was just over 2% in Feb-March 2020. It shows an increased number of job losses, people getting unemployed, and making decrease in aggregate demand. It is an indication of economy going into slowdown. In the short run, the GDP growth rate has been projected to be negative for 2020, from the growth rate of 2.33% in 2019. So, US GDP is also shrinking at present time due to the impact of  COVID-19 pandemic in present time.

Now, these economic conditions are also recognized by the government and Federal Reserve. The government has increased the spending and come up with a package of over $3 Trillion to provide benefits to people. Fed also worked proactively to reduce the federal fund rate to be up to 0%. It shows that authorities also recognize the economy to be in the state of slow down.