State of current US Economy - Term Paper Example

The rise in growth is primarily due to the contribution of positive factors such as increase consumption, increased volumes of exports and growing in domestic investments. The increase in imports was also registered in the second quarter. This increase was likely influenced by the stronger dollar. The real GDP and the potential GDP were closely compatible in the years that preceeded the great recession. However, the real GDP shrunk dramatically during the recession. This contraction continued for some time until in 2009 when a slight improvement was registered.

Despite the increase, the contraction of the real GDP is still evident since the output gap in the second quarter of 2014 stood at $655000.2 The stronger GDP figures have also been tied to stronger job reports. For example, the growth between January and October was registered due to 200000 additional jobs on monthly. The low-skilled and low paying sectors of the economy also played a crucial role in resuscitating the economy. These sectors include retail and drinking places. The lowest unemployment rate was recorded and it stood at 5.8%. The unemployment is said to be the lowest since 2008.

Thus, it indicates that the US economy is on a positive trajectory. Even though there was a lower rate of unemployment, the rates remain high. Some people are employed on part time in the United States and account for 7 million of the employed class. 2.2 million People are marginally attached hence indicates the existence of weak labor participation in the job markets. There has been reduced labor participation since 2009. This rate has been less than 66%. The implication of the low labor participation is that United States economy underutilizes its labor resources.

3 Under normal economic circumstances, the economy should be able to encourage a high participation of the labor resources. People with various skills and talents should be willing to take part in the recruitment process to enable them