Essay Sample on The United States Economy

📌Category: Economics, United States, World
📌Words: 1267
📌Pages: 5
📌Published: 16 June 2022

An economic indicator is a part of the economic data, mainly involving macroeconomics because it is used by analysts to create an understanding of current or future investment possibilities. These indicators also help to judge the economy as a whole. The United States economy can be best described as “exhibiting characteristics of both capitalism and socialism. Such a mixed economy embraces economic freedom when it comes to capital use, but it also allows for government intervention for the public good” (Sean Ross).

The business cycle’s four stages are peak, recession, trough, and expansion. Peak is a maximum where the economy is at or near full employment but not permanent. Recession is defined as a period of decline in output, income, and employment. There is a widespread contraction of the economy. Real GDP decreases, while unemployment increases. Trough is where output and employment are at their lowest levels. Expansion is a period where real GDP, income, and employment rise as the economy approaches full employment. “The economy would grow 4.5 percent in 2022, downshifting from an expected 5.7 percent expansion in 2021. Its forecast for the United States shows an even steeper slowdown, from 6 percent growth this year to 3.9 percent next” (Neil Irwin). I think the economy has already been moving towards a new phase as everyone is trying to push past the setback from the pandemic. Although I do believe it will take past the new year before we start seeing major change. Once the world realizes that coronavirus will never go away and that the vaccine is the best way to protect yourself like the flu, then the economy can grow again. 

GDP means Gross Domestic Product, it is the measurement that seeks to capture a country's economic output. “Current‑dollar GDP increased 13.0 percent at an annual rate, or $684.4 billion, in the second quarter to a level of $22.72 trillion. In the first quarter, current-dollar GDP increased 10.9 percent, or $560.6 billion” (BEA). The growth rate comes from the annual rate of change. The growth rate measures an economic recession or expansion. 

Inflation is measured by the customer price index, which measures price changes by consumers, who represent almost all of the U.S. population. The Consumer Price Index increased 6.7% over the past few months. Last month the CPI increased to 0.8% because of the season change. The index for all decreased food and increased energy by 0.5% last month. Overall 4.9% in the year combined. 

Unemployment is measured by dividing the unemployed people by the number of people working. It is usually measured by using the United States Census. Why is unemployment not a perfect measure of joblessness? After researching I have found that the reason it is not perfect is that they don’t count anyone who is working or anyone not looking to work. It does seem hard to get an accurate number because there are so many different reasons people do not work or work, it becomes hard to categorize the reason. Adding a new reason this past year with coronavirus, leaving many people without work. The current unemployment rate is 4.2% in the US, which is 6.9 million people not working. I think the stimulus checks have given people a reason to postpone going back to work. Also, companies are having a hard time getting workers. Companies are offering bonuses and other perks to get new workers. It is crazy that companies have to entice workers, because it should be workers trying to impress companies to hire them, not the other way around. I also think that the average employment age has increased because I am 19 years old and I just got my first job this year. 

Monetary Policy is the amount of money available in an economy. “By managing the money supply, a central bank aims to influence macroeconomic factors including inflation, the rate of consumption, economic growth, and overall liquidity” (The Investopedia Team). After researching monetary policy I found that The Fed is who conducts the monetary policy in the United States. Congress gave the Fed two goals. First is to maximize employment. Second, to keep stable prices which equals a stable inflation. They can increase or decrease the interest rats by setting upper and lower limits. Also they can change short-term rates on consumer loans and credit cards. When researching I came across this article that said “The Federal Reserve on Wednesday announced that it is accelerating its removal of monetary support for the economy, citing a rise in inflation that has seen the biggest jump in prices in nearly 40 years. In a move to cool growth, policy makers also said they expect to hike interest rates three times in 2022” (Irina Ivanova). 

Fiscal Policy in economics the fiscal policy is the use of government revenue collection and expenditure to influence a country's economy. Is the President and Congress currently running expansionary fiscal policy or contractionary fiscal policy? THe U.S. fiscal policy has been expansionary since 2009. The main cause was because of the huge recession that took place from late 2007 till 2009. It has not changed since then. After looking through the Congressional Budget Office article I found it evaluates two and five year markers for economic forecasting, starting in 1976. “The largest errors stem mainly from turning points in the business cycle, changes in labor productivity trends and crude oil prices, the persistent decline in interest rates, the decline in labor income as a share of gross domestic product, and data revisions” (CBO). It is very interesting that they forecast every two and five years because I feel like not much changes in two or five years. I feel like ten year forecasting would be more useful, but two and five years keep us in the loop, so we do not miss something important. 

International  Trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. The U.S. trade with Brazil, Norway, South Korea, Australia, and Canada is who we trade with this year. Some of those countries were a shock to me and honestly I expected China but I guess we do not trade with them as much as we just buy almost everything from them. Yes, I think that free trade should be encouraged because it would allow us to buy more for better quality and for not as much. That will lead to more innovation and push economic growth. I think there are a lot of positives with free trade. The only thing that would change my mind would be after doing research on the pros and cons of free trade. I came across an issue and that being it does not protect the environment. Protecting the environment is very important for me. I need to move to the top of the government's to-do list. Learning that I will change my mind and see until there is a way to protect the environment and maintain free trade, I do not think it should be encouraged. 

In conclusion, a lot goes into a working economy, especially the U.S. economy. Going into this project when I was reading the directions I thought, how can I write a five page essay on the economy? But once I began researching and answering the questions, my mind changed and I have gained so much knowledge. I know I have something to talk about at the dinner table. The United States economy can be described as “a free-market, private enterprise system that has only limited government intervention in areas such as health care, transportation, and retirement. American companies are among the most productive and competitive in the world. Unlike their Japanese or Western European counterparts, American corporations have considerable freedom of operation and little government control over issues of product development, plant openings or closures, and employment” (Nations Encyclopedia). Know that is a pretty impressive title for the United States. I now have a greater understanding behind the scenes of what makes the world run. This has definitely been one of the most educational and important papers I have ever written and researched. “So the American economy needs the world, and the world needs the American economy” (Rodrigo Rato).

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