Current Macroeconomic Situations - Essay Example

Current Macroeconomic Situations Table of Contents Current Macroeconomic Situation in US 3 Fiscal and Monitory Policies Required 4 References 5 Current Macroeconomic Situation in USThe economy of US has been known as the largest economy in the world. It is a $14.66 trillion economy (Central Intelligence Agency, n.d.). However, for the last 3-4 years it has been passing through a rough phase where it has experienced contraction in GDP growth, increase in unemployment rate and threats from developing economies like China and India.

US economy was in recession during the period of 2008-2009. It started to recover from 2010 but it seems that the recovery is not a sustainable one as it may contract again in the coming days. Recently the country has faced severe debt crisis as it almost ran out of money before raising the debt ceiling. In the first quarter of this year the US economy has grown only by 1.8% whereas in the previous quarter it grew by 3.1% (Bangalore, 2011). As far as unemployment rate is concerned, it was at 9.

1% in the month of August, 2011. There is hardly any improvement when compared to the data of previous months. According to a report that is recently published by the Bureau of Labor Statistics, at present, almost 14 million people are unemployed in the country (Bureau of Labor Statistics, 2011). What is more important is that in August the US economy could not create any ‘net new’ jobs. In July almost 85000 jobs were created but it is much lower than the expected figure 1,17,000 (BBC, 2011).

It is found that Afro-Americans are mainly unemployed (16.7%) followed by the Hispanics (11.3%). There are many experts who believe that such a situation is actually the signal of the fact that US economy is preparing to get into another recession in the near future. In August it was found that the probability of recession in US was one fourth. A more dangerous report came in when Wall Street Journal published the result of a survey in September. According to this study, economists now believe that the chance of US economy sliding into another recession within next one year is now stands at 1-in-3 (Zappe, 2011).

Inflation, in US is not a big concern. However, in 2010 inflation rate was 1.6% which is quite high as compared to previous year’s figure (-0.3%) (Central Intelligence Agency, n.d.). In August, 2011 inflation rate was found to be at 3.8%. The consumer price index has increased by 0.4% in that month (Trading Economics, n.d.).Fiscal and Monitory Policies RequiredThe current economic situation in US can be viewed as the failure of fiscal and monitory policies that are adopted by the government.

Considering the facts like GDP growth is affected, jobs are not getting created and consumer confidence on US economy is declining, new policies are needed to be developed by the US administrators without wasting much time. Slow and temporary recovery from the last recession actually shows that monitory or fiscal stimulus can no longer be used to solve the problem for long term and probably that is why Federal Reserve is yet to declare any such decision even after seeing some crucial economic data.

Both the fiscal as well as monitory policies are required to be changed from their fundamental levels in order to deal with the current macro-economic situation in US. ReferencesBangalore, A. (April, 2011), U.S. 2011 Q1 Real GDP Economic Growth One of the Three Smallest Gains of the Recovery, The Market Oracle, Retrieved on October 7, 2011 from http://www.marketoracle.co.uk/Article27836.html BBC, (September 2011), US economy: No new jobs added in August, BBC News, Retrieved on October 7, 2011 from http://www.bbc.co.

uk/news/business-14763093 Bureau of Labor Statistics, (September 2011), The Employment Situation – August 2011, US Department of Labor, Retrieved on October 7, 2011 from http://www.bls.gov/news.release/pdf/empsit.pdf Central Intelligence Agency, (No Date), United States, The World Fact Book, Retrieved on October 7, 2011 from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html Trading Economics, (No Date), United States Inflation Rate at 3.80%, Retrieved on October 7, 2011 from http://www.

tradingeconomics.com/united-states/inflation-cpi Zappe, J. (September 2011), Economists Give U.S. 1-in-3 Chance Of Recession. What Should HR Do?, Ere.net, Retrieved on October 7, 2011 from http://www.ere.net/2011/09/16/economists-give-u-s-1-in-3-chance-of-recession-what-should-hr-do/