Assessing the Performance of the U.S. Economy - Essay Example

The report is started with the overview of the current state of the economy of the United States of America. This is followed by an identification of the most relevant economic theories and principles that can be applied to evaluate the performances of the US economy over a specific time period. The report is suitably concluded by highlighting the findings from the analysis and prescribing the macroeconomic policies that should be formulated for analyzing the economic performance of the nation.

The macro economic performance of any economy can be estimated through the use of different economic metrics that represent and mirror the economic performance of a nation as estimated from different dimensions and perspectives. For this purpose, multiple theories and principles of economics are implemented in the analysis. The six main economic metrics that are used for the analysis with their application in the US economic scenarios are given as follows and heir correlations are given in Appendix 1.

The gross domestic product is an important economic metric which is an aggregate measure of the monetary value of all finished goods and services that are produced by all residents and institutional units within the national border of a country (Mankiw, 2007). The Gross Domestic Product can be used as a key economic indicator for gauging the health of the US economy. The GDP of US has contracted by 0.7% in the first quarter of 2015 as compared to the last quarter of 2014. The average GDP growth rate of US from 1970 to 2015 is 3.

26% (Appendix 1). Since the US economy is one the most advanced and diverse economies of the world, therefore it has been able to manage its GDP fluctuations through the proportions of production from different sectors. However, the contraction noted in the first quarter of 2015 was a reflection of the higher accumulation of inventory and widening trade deficit in the economic constructs (Bade and Parkin, 2002). The purchasing power parity is a