Current state of the US economy - Essay Example

Current United s Economic April 12, Introduction The economic indicators present the true picture of how the United States is performing. The unemployment rate shows the number of unemployed persons. The GDP shows the production outputs of United States companies. The loan interest rate shows how much business must pay for borrowing money. Inflation shows the increase in the current prices of local products. The housing rate shows the current demand for local housing units. There are different probabilities in terms of the short term and long term performance reaching the pre-2007 economic levels.

Unemployment The United States unemployment rate is improving. During January of 2014, the nation’s unemployment rate dropped to 7.0 percent. During February of 2014, the nation’s unemployment rate dropped further to only 6.7 percent. During March of 2014, the nation’s unemployment rate remained at 6.7 percent. The unemployment rate shows the United States generated a declining rate of unemployment during the last four months (Bureau of Labor Statistics 1). Further, Wall Street reporter Glenn Hubbard’s April 4, 2014report showed a decline in the recent United States unemployment rate (Hubbard 1).

Hubbard reported that “latest unemployment rate favorably dropped to the 6.7 percent rate. The rate is lower than the highest unemployment rate, 10 percent, during the peak of the United States economic depression.” The latest United States economic depression reared its head during 2008. Despite the unemployment rate decline, only an estimated 63 percent of the 16 year old or older residents entered the work force. The other unemployed Americans preferred to abstain from the long line of job applicants seeking the next available job.

Furthermore, one related Wall Street report states there are possible reasons for the lack of interest to find and land a job (Hubbard 1). One reason is lack of encouragement to be hired. The recent depression’s effect on the difficulty to find a job left an impression that the current environment shows it is hard to find a job. Next, the technological changes have left the “technically uneducated” job applicants with no skills needed to land technology-based jobs. The globalization also contributes to the low excitement to find jobs.

Globalization includes transferring production to countries with cheaper labor rates, including China, India, and other Asian Countries. GDP The Bureau of Economic Analysis of the United States reported gross domestic production (GDP) is economically fine (BEA 1). During the January 2013 to March 2013 period, the country’s gross domestic production increased by 1.1 percent over the 4th quarter of the prior year’s October 2012 to December 2012 period. During the April 2013 to June 2013 period, the country’s gross domestic production increased by an estimated 2.

5 percent over the prior 3 month period . During the July 2013 to September 2013 period, the country’s gross domestic production increased to the significantly higher 4.1 percent. During the October 2013 to December 2013 period, the country’s gross domestic production increased unfavorably dropped to the lower 2.6 percent (Bureau of Economic Analysis 1). According to Wall Street reporter Jonathan House, the 3rd quarter 4 percent GDP increase was lower than the period’s estimated 6 percent increase in corporate profits.

House affirmed that the local United States corporations’ profits rose record high figures during 2013, specifically during the July 2013 to September 2013 economic time period . Specifically, the United States Commerce Department reported that the October 2013 to December 2013 economic period generated an estimated $ 2 trillion profits (House 1). Inflation According to a Wall Street report, the United States inflation is weak (Mutikani 1). Mutikani reported that the United States inflation rate and housing data dropped.

The drop occurred during the past three months. The same author observed that that the United States Department of Labor reported inflation’s consumer price index was pegged at 1.1 percent. The decline in gasoline pump prices had covered up the biggest increase in food prices within the past two years. Housing One Wall Street report states the housing demand in the United States continues to drop. The March 20, 2014 Wall Street report shows hurdles, economic crisis effects, plagued the current United States housing market segment (House, U.S. Housing Recovery Hits Hurdles 1).

During February of 2014, the local Washington home sales dropped. The home sales statistics of prior owned homes had declined to 0.4 percent. The percentage represents an estimated 4.5 million homes. The Real Estate business sales of prior owned homes constitute an estimated 89 percent of the total real estate trade. During February of 2014, the average home price reached an estimated $190,000. Interest rates The recent Wall Street Report states “the United States government’s Central Bank strived to keep the local interest rates at near zero levels” (Ramage 1).

The low interest levels allowed the businesses and individuals to borrow money from banks and other business institutions at low interest rates. Consequently, the low interest rates allowed the borrowers more funds to expand or maintain the business operations. The Central Bank intended to have near zero interest rate levels in order to pump up (invigorate) the currently slow United States economy. The same report states that the United States Central Bank will increase the interest rates ceiling if the unemployment rate improves.

The local banks and other loan institutions are prohibited from raising their interest rates higher than the maximum amount allowed by the United States Central Bank. Another report stated that the March 2014 Central Bank (Federal Reserve) meetings affirmed its current stance to peg the loan interest rates at between the zero level and ¼ interest rate levels (United States Federal Reserve 1). The United States Central Bank explained that the current stance will help local United States companies recover from the 2007 economic depression that hit the United States.

The low interest rates are expected to reduce the unemployment rate as companies can borrow more funds at low interest rate to set up new businesses. The new businesses will hire workers, reducing the unemployment rate. Conclusion The current United States economic indicators show the government is trying its best to improve its slow economy. The unemployment rate is slowly improving. The March 2014 unemployment rate, 6.7 percent is the lowest during the January 2014 to March 2014 monthly periods.

Next, the United States economy is able to generate positive gross domestic product statistics, with its highest at 4.1 percent increase during the 3rd quarter of 2013. The United States inflation rate, consumer price index, is low, 1.1 percent. The demand for housing continues to drop amid the current economic crisis enveloping the United States. The prevailing loan interest rate is pegged at near zero to increase the economy. Evidently, the short term performance will not be enough to return to the pre-2007 economic levels.

However, the long term performance has higher probabilities of meeting the pre-2007 economic level benchmarks. Works Cited: House, Jonathan. "Firms Profits Rise to Record High, Outpacing GDP Growth." Wall Street Journal (2014): 1. Print. House, Jonathan. "U.S. Housing Recovery Hits Hurdles." Wall Street Journal (2014): 1. Print. Hubbard, Glenn. "The Unemployment Puzzle: Where Have All the Workers Gone?" Wall Street Journal (2014): 1. Print. Mutikani, Lucia. "Weak U.S. Inflation, Housing Data Point to Sluggish Growth.

" Reuters (2014): 1. Print. Ramage, James. "Dollar Falls on Interest Rate Outlook." Wall Street Journal (2014): 1. Print. UnitedStatesFederalReserve. Why Are Interest Rates Being Kep at a Low Level? Committe. New York: United States Central Bank Federal Reserve, 2014. Print.