Current macroeconomic situation in the U.S - Essay Example

Current Macroeconomic Situation of the US At present, high unemployment and slow economic growth are the predominant features of the US economy. The whole year 2011 remained slow for growth and the last quarter rapid growth was mainly due to temporary factors (Perlo, 2012). All of this points to only one thing, the combined problem of high unemployment and slowing growth rate. The unemployment aspect of the US economy is actually a little dire. The unemployed population is quitting the hunt for jobs.

Moreover there is a widespread agreement on the notion that, even if the economy gets on a steady track, it won’t be until a couple of years later that the economy will be moving towards growth such that it would create jobs and resolve the ever increasing unemployment (Perlo, 2012).The recovery is expected but after two years, and this recovery will continue for a long period of time and even reinforce it eventually (Perlo, 2012). A critical view point to this whole situation is that the profits have been restored at the expense of social benefits and salaries, but it will eventually have an impact on investments resulting in an increase.

When looking at the real estate, there has been no new housing construction. But when the up surging demand from family household is considered there is a good chance that there will be a boom in the real estate market in the near future.One should always be kept in mind when analyzing the current situation of the US that this is the recovery session after the financial crisis, so circumstances are definitely abnormal. As mentioned earlier, job creation is of paramount importance. According to an estimate, over 300,000 new jobs need to be created every month if a significant change is to be observed in the near future.

The FOMC or the Federal Open Market Committee met in August 2012. The statement given in the form of press release suggests that “economic activity has continued to expand at a moderate pace in recent months” (federalresesrve.gov), quite an objective statement but it definitely tells why the word ‘moderately’ has been used here. The economic activity is not that helpful, the other factors have played a part in better results of the recent quarter. However, the economic activity is also not going wayward.

Certain easy money policy tools have backfired for economy. For instance the total income factor (wage rates) has been declining because of the tools that have been used to handle the finances (Mauldin, 2012). After the financial crunch of 2008, the falling prices of homes have troubled the investors manifolds that eagerly invest in homes and real estate. But one good thing at the moment is better credit conditions. But there is no need to add meaning to this apparently good performance in credit as the recent quarter showed improved performance but that was certainly not triggered by some substantial economic activity.

That improvement was caused by solid output from manufacturing industry especially the automobiles.Such performances may be good enough to improve results for a quarter, however if there are solid, sustainable and improving growth rate is desired in the US economy, major improvement in macroeconomic policies are needed otherwise, for the rest of the year, more volatility in the macroeconomic performance is expected.Inflation at the moment stands at 1.7% which has gradually decreased this year from 2.

9% in January (US inflation calculator, 2012). GDP growth rate has declined (revised) in the second quarter and rests at 1.3% ("Trading economics," 2012). Probably the greatest expansionary fiscal policy tool used during Obama’s reign was the $800 billion federal spending and tax package, which was ratified three years ago in 2009 (Lucking & Wilson, 2012). This expansionary policy had a huge impact on the current situation on the US economy.   Works CitedBoard of governors of the federal reserve system.

(2012, September 13). Retrieved from http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htmLucking, B. & Wilson, D. (2012, July 02). US fiscal policy: Headwind or tailwind?. Retrieved from http://www.ritholtz.com/blog/2012/07/us-fiscal-policy-headwind-or-tailwind/Mauldin, J. (2012, September 1). The consequences of easy monetary policy. Retrieved from http://www.businessinsider.com/the-consequences-of-easy-monetary-policy-2012-9Perlo, A. (2012 ). The US Economic Situation and the 2012 elections.

Retrieved from http://www.politicalaffairs.net/the-us-economic-situation-and-the-2012-elections/Trading economics. (2012). Retrieved from http://www.tradingeconomics.com/united-states/gdp-growthUS inflation calculator. In (2012). US inflation calculator. Retrieved from http://www.usinflationcalculator.com/inflation/current-inflation-rates/