Question

Macroeconomic Statistics – (20 pts. - answer should be one paragraph. You can certainly use the Bureau of Labor Statistics website – bls.gov – for your research). a) As we have studied, macroeconomists have developed many ways of measuring national economic performance. And, as you know, the COVID-19 pandemic has put our economy in a serious tailspin.  Using some of the following terms, briefly describe the state of our economy as we begin the second quarter of the year: GDP growth, consumer price index (CPI), unemployment rate, budget deficit, productivity and leading indicators. b) Briefly, how do these statistics compare with the Great Recession of 2008 and the Depression of the 1930s?

Answer 1

a) As we know, the COVID-19 pandemic has worsened economies all over the globe. As we take a step into the second quarter of the year 2020, let us take a look at some of the current economic statistics. The GDP growth has fallen by 4.8% in the first quarter of 2020 and is believed to fall even further. The CPI or inflation is at 0.6% and the unemployment rate has increased by 14.7% in april 2020 with 23.078 million people unemployed in the first quarter. The financial year 2020 created a budget deficit $1.083 trillion and massive coronavirus rescue spending will increase the US budget deficit further. Productivity indicators like labour productivity in the United States non-farm business sector fell by an annualized 2.5% during the first quarter of 2020.

b) When we compare these statistics with that of Great Recession of 2008, we see that the GDP rate fell by 4.3% and the unemployment rate increased from 5 to 9.5% in 2008 as people lost their jobs. The financial crisis of 2008 saw an inflation of 0.1% and a budget deficit of 3.2% of GDP. During the depression of 1930's, there was severe worlwide economic depression which saw a GDP fall by 15% and unemployment increased to 23%. The inflation rate started from -6.4% in 1930 and fell further to -10.3% in 1932. The budget deficit had reached $2.7 billion by 1932, which is the third-largest budget deficit ever recorded in America.