Question

Based on your textbook material and the discussions/work online, give us your assessment of how the economy is doing today and what are the expectations for the near future. Use data and add links to articles you have used.

Limit = 300 words

Answer 1

Depending on the main economic indicators, the U.S. economic outlook is healthy. The gross domestic product, which calculates the production output of the country, is the most important indicator. The GDP growth rate is expected to remain between the 2% and 3% ideal range. It is forecast that unemployment will persist at the natural rate. Inflation or deflation is not too much. That's a Goldilocks economy.

U.S. Growth in GDP will slow down from 3% in 2018 to 2.2% in 2019. It will be 2% by 2020 and 1.9% by 2021. That's according to the latest forecast released on September 18, 2019 at the Federal Open Market Committee meeting.1 The projected slowdown in 2019 and beyond is a side effect of the trade war, a key component of Trump's economic policies. In 2019 and 2020, the unemployment rate will reach 3.7%. It's going to bump up to 3.8% in 2021. That's below the 6.7 percent target of the Fed. Nonetheless, former chairman of the Federal Reserve Janet Yellen acknowledged that many employees were part-time and would prefer full-time work. However, most growth in employment occurs in low-paid retail and food service industries.

Inflation is forecast to reach 1.5% in 2019. It will increase to 1.9% by 2020 and 2.0% by 2021. The core inflation rate excludes the volatile costs of gas and food. When setting monetary policy, the Fed tends to use that price. In 2019, the core inflation rate will reach 1.8%, in 2020 1.9% and in 2021 2.0%. The core rate is slightly below the target inflation rate of 2 percent for the Fed. That may force down interest rates in the Fed space. The history and prediction of U.S. inflation rates provides a good basis for forecasting levels of inflation in the coming years.

On September 18, 2019, the Federal Open Market Committee cut the existing fed funds rate to 2.0 percent. This interest rate is not expected to rise in the foreseeable future. In addition, in 2019, it indicated it might lower it again. The Fed is more concerned with promoting growth than with reducing inflation. In fact, in the next three years, it does not see inflation as a threat at any time. Short-term interest rates are regulated by the fed funds rate. These include the prime rate of banks, the Libor, most adjustable loans, and rates of credit cards. In choosing fixed-rate loans whenever possible, you can shield yourself from the Fed's rate hikes.

Each decade, the Bureau of Labor Statistics releases a job forecast. This goes into great detail about each sector and occupation.5 Overall, between 2010 and 2020, the BLS expects total employment to grow by 20.5 million workers. Although growth will occur in 88 percent of all professions, the fastest growth in health care, personal care, social assistance, and construction will occur.