Abstract United States is one of the world’s super powers following its developed economy. This has been attributed by strong nominal GDP, low unemployment rates, low inflation rates, strong currency and developed infrastructure. Although its economy has been affected by the economic crisis of 2007/2008, their macroeconomics still remains positive. This paper focuses on the macroeconomics of the United States. Under this, the paper discusses the Gross Domestic Product of the States, Unemployment rates, Inflation rates and the exchange rates. It starts by giving a brief introduction of the U.S. macroeconomic in general then goes further to discuss each of the macroeconomics in details. Finally, the conclusion gives a brief summary of the entire paper.
Introduction
United States is the world’s largest national economy with a GDP estimate of about $2 trillion. According to the 2012 report, its nominal GDP stood at $15.7 trillion which can be taken to present a quarter of the world’s nominal GDP. The US is one of the world’s wealthiest nations with a well-developed infrastructure, a variety of natural resources, and high productivity from its developed industries. Nevertheless, the States is well known for investing heavily in foreign countries with its foreign investments standing at $3.3 trillion. United States has employed more than 154 million people with its government employing 22 million people. This is to say that its government has played a major role in ensuring that its citizens get jobs in order to raise their living standards. Small businesses in the State have created the largest percentage of employment which stands at 53%, and large business employing 38%. However, the unemployment rates in the United States also remain high at 7.6% as at the start of 2013 (Bureau of Labor U.S Statistics, 2013). United States expenditure accounts for a third of the GDP with each of its government providing direct services. For instance, the federal government is concerned with the defense force, back research which focuses on the development of new products and also involved with job creation. This is to mean that this government accounts to the big spending percentage relative to the others. On the other hand, the State governments are concerned with the construction and maintenance of the US highways. Taxation remains the favorable income source for the government of United States. Its taxation is said to be complex following its different levels of government and several taxation methods. The US uses dollar which is a unit of its currency and it is internationally accepted and used in many transactions. Many of the world countries make use of the US dollar as their official currency. The federal government makes use of monetary policy as the main control of its money via changing of the interest rates. Nevertheless, it uses fiscal policy on taxes and spending thus helping the nation to maintain high economic growth rate, low inflation and low unemployment rates. Gross Domestic Product United States experienced a GDP growth rate of 0.40 percent in the fourth quarter of 2012 comparing with the previous quarter. From the Bureau of Economic Analysis, the US GDP growth rate averaged 3.23 percent since 1947 till 2012. According to the (National Economic Trends Nominal GDP", 2013. p. 24) the GDP reached a high of 17.2 in 1950 percent and a low of -10.4 percent in 1958. The reason for this is because its economy remains the most diversified and technologically advanced in the world. Sectors such as Finance, Leasing, Health Care, Insurance, Real Estate, Social assistance, Business, educational and professional services are the main contributors of the US economy accounting for 40 percent of the Gross Domestic Product. The other contributors to the economy are transport, warehousing, retail and wholesale which contribute 22 percent to the US GDP (National Economic Trends Consumer index", 2013. p. 28). The increase in the real GDP in the last quarter of the year 2012 has been associated with contributions from personal consumption expenditures and residential fixed investments. The real personal consumption expenditures went up by 1.8 percent, durable goods and nondurable goods also went up by 13.6 and 0.1 percent (National Economic Trends (Nominal GDP"), 2013. p. 24). However, the real imports and exports decreased but the real imports decrease was so prominent as compared to the exports this helped in improving the GDP growth rate. Therefore when the real exports of the United States overcome the real imports, then the nation experiences a GDP growth rate otherwise it experience a fall in the GDP. The graph below summarizes the GPD growth rate of the U.S since 2008 to 2012.
Unemployment Rates The United States unemployment rates stood at 7.6 percent back in February this year. Following the economic recession of 2009 the immigrants of the US were able to secure 656,000 jobs where else the US born workers lost more than a million jobs. This led to an increased unemployment rates up to 9.1 percent in 2010. Although the recession period, unemployment rates went high but the government of the US increased the part-time workers to 8.8 billion which was an increase by 4 billion (Bureau of Labor U.S Statistics, 2013). Thus it is clear that the employment rates of the US in 2013 have fallen down. However, there is great concern to decreasing household income, and the federal budget cuts still show indicative of a jobless recovery. Unemployment in the US is subject to increased population in the country which has led to an increase of the percentage of the unemployed. Thus logically this remains one of the main causes of the US unemployment. In addition, many of the US firms which provide employment to the nations citizens has been seriously affected by stiff competition among other world firms thus leading to financial difficulties leading to their closure. Following their close down, the employees working in these firms are left unemployed. Finally, the minimum wage in the US remains at a high of $6.55 per hour thus affecting the many firms ability to employ many people. This wage rate is very high relative to other countries thus implying that the minimum wage of the other countries is lower. The table below gives the summary of the United States unemployment rates since 2011 to 2013.
Inflation rates From the latest data analysis conducted in February 2013, the inflation rates of United States remained at low of 2 percent. This was a report from the Bureau of Labor Statistics. From the history, the inflation rates of the US averaged 3.35 percent since 1914 until 2013 however it once reached a high of 23.7 percent back in 1920 and also went to a low of -15.8 percent in 1921. The main cause of high inflation rates in the US is due to the economic crises of the year 2007/2008 (Bureau of Labor U.S Statistics, 2013). This affected the GDP of the country thus forcing the country to raise taxes so as to suppress the effects of the economic depression. With increased taxes, many firms suffered an increased cost of production. Following the increased cost of production the prices of goods and services suddenly went up thus raising the inflation rates. The inflation rates in the US started going down after the economic crises of 2007/2008 following the fiscal policy adopted by the U.S. government to curb its effects. The U.S. focuses on various categories in monitoring its inflation rates. These include the unadjusted consumer price index for the urban consumers with focus on the food, shelter and energy. Foods are said to account for about 14 percent of the total index with energy estimated at 10 percent. On the other hand, the transportation sector amounts to 6 percent of the measure and medical care complete with 5.5 percent (Bureau of Labor U.S Statistics, 2013). A slight change on this percentage implies a change in the inflation rate of the United States. An increase in any with a constant in the others results to increase in the inflation rate. Thus is always a great importance for the United States government to concentrate on these indexes. The table below shows the inflation rates for the U.S as reported by the Bureau from the year 2011 up to 2013.
Conclusion United States economy is one of the largest in the world giving the nation an upper hand in the world’s economy standing. This is because it is able to control various trade issues around the world without much interference from many developing countries. Although, its economy is still experiencing a shake from the economic crisis of 2007/2008, its macroeconomics clearly shows that the nation is improving. The Gross Domestic Product shows an improvement with a growth rate of 0.4 percent during the last quarter of 2012 (Bureau of Labor U.S Statistics, 2013). On the other hand, the inflation rates remain at low of 2 percent as at the first quarter of the 2013. However, this is an increase as compared to 1.8, 1.7, and 1.6 percent for second, third and fourth quarter of 2012. Finally, the unemployment rates stand at 7.6 percent which is an improvement from 7.7 percent at the beginning of the year 2013. The trend from the graph show that the unemployment rate is in a decreasing trend. The future growth of the U.S economy will depend on the improvement of its macroeconomics.
References
Labor U.S Statistics (2013). Retrieved from http://www.tradingeconomics.com/united- states/unemployment Bureau of –rate
National Economic Trends (Consumer Price Index)". Federal Reserve Bank of St. Louis. February 22, 2013. p. 28. Retrieved February 25, 2013.
National Economic Trends (Nominal GDP)" . Federal Reserve Bank of St. Louis. February 28, 2013. p. 24. Retrieved March 2, 2013.
