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Research Paper example - forecasting the future of the U.S. economy over the next year.
Macro & Microeconomics
Pages 5 (1255 words)
Given the great worsening of balance sheets in US households as well as businesses, the probable decrease of the volume of potential output of the US economy predictions of the economy of the country in next years’ path carries a great degree of uncertainty. This has been…
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However, the recovery of the U.S. has been expected to carry on, albeit at the sluggish pace (Elwell, 21). This paper is aimed at providing forecasts on the future of the US economic variables.
The level of inflation has been very high since 2007. This high level of inflation is now considered as the biggest problem in the country by the Fed. Due to this high level of inflation, consumers are not getting capable of purchasing costliest goods and services and hence business organisations which are engaged in production of these goods and services are leaving the industry. Again this is reducing the level of income in the country and hence the level of demand for necessary goods and service. The Fed is expecting to have a subdued in the next few years because of weaker level of real economic activities prevailing in the country. But the Fed is expecting to have a lower level of inflation rate in 2013 which is expected to increase the volume of economic activities in the country. The Fed is expecting that the current rate of change in overall prices is expected to fall to 1% to 2% from its current level of 3% within five years. But the Fed is expecting that the rate of inflation will remain unresponsive in newt few years due to the fact the American economy is still under the curse of financial and economic crises situations (Minutes of the Federal Open Market Committee, 1).
The Federal Reserve or Fed, in short, holds a very positive view regarding the current economic activities and the current condition of the financial market of the country. The chairman of the Fed, Dr. Ben S. Bernanke, has argued that after the global financial crisis of 2007-08, the American economy is experiencing greater volume of economic activities (Bernanke, 1). The IMF predicts the value of real GDP in the US to rise at 1.5% in 2011 (which is lower by1.0 percentage points than that of in June 2011 prediction) and at 1.8% in 2012 (which is lower by 1.1% than the June 2011 prediction) ...
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