ANALYSIS OF U.S. ECONOMY - Essay Example

Analysis of US Economy The United s of America is certainly having a tough time when it comes to the economy of the country. The US economy has been on the verge of a near meltdown following the downward trend that is prevalent in the entire global market. Recent reports have shown certain factors that may lead to a determination of how well the US economy is coping. There is some stipulation that the economy might be on a way to recovery as the real gross domestic product of the country rose to 2.

6%, which is slightly above that estimate which was put forward previously (US Department of Commerce). This may perhaps be the reason for the speculation over the state of the economy considering that during the second quarter the gross domestic product rate fell slightly lower than that which was produced in the first quarter of the year. However, these higher numbers may not necessarily mean that the economy is going to bounce back. There is still concern over the consumer spending as this only rose to 2.

4% which was less than the estimation and this may well be a concern as consumer spending constitutes about seventy percent of the gross domestic product . There have been cuts in taxes to coax the consumers from spending more and this may perhaps have helped the situation. By cutting taxes to a degree which would encourage spending there may well be a rise in the gross domestic product and this would certainly be a big boost to the recovering economy. There are some economists who believe that within next year the rate may well rise to 3% and perhaps even more but it would be too early to measure the specific rate.

Consumers have also gained confidence are now more welcome to the idea of spending. Incomes and spending have risen, which in result have led to a fall in the savings. The Bureau of Economic Analysis has submitted the figures of savings which have dropped from $622.8 to $614.8 from September to October. Figures such as these are a good sign that consumers are becoming more confident about spending money and this is a welcome boost to the industries and especially retailers (US Department of Commerce).

The rate of the gross domestic product would not be the only assessment of the economy. Unemployment rates in the United States are at a high and have even increased to a rate of 9.8% (United States Department of Labor). According to one report, the rates are still lower than what the actual situation is at the moment due to the fact that those who have stopped trying to get jobs due to the slow economy are not being counted towards the statistics with rates climbing higher (Economagic). Unemployment needs to drop to about five or six percent for there to be a real recovery for the economy.

The US economy is on a steady road to recovery but it will certainly take time. The Federal Reserve Bureau has stated that there has been confidence in the stocks as well, there was a massive liquidation of stocks and such in the two three years before and now there is again assurance in businesses (Federal Reserve). Recovery may be possible but unemployment needs to be addressed if there is to be a stable recovery. Not only this but the budget deficit also need to be redressed to ensure recovery (Congressional Budget Office).

BibliographyCongressional Budget Office. THE BUDGET AND ECONOMIC OUTLOOK: AN UPDATE. August 2010. 25 December 2010 .Economagic. US enemployment rate: Alternative Measures of Labor Underutilization. 2010. 25 December 2010 .Federal Reserve. Monetary Policy Report. Report to Congress. Washington: Federal Reserve Bureau, 2010.United States Department of Labor. Bureau of Labor Statistics. 2010. 24 December 2010 .US Department of Commerce. National Income and Product Accounts. 2010. 24 December 2010 .—. National Income and Product Accounts Table.

22 December 2010. 25 December 2010 .