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U.S. Macroeconomic Situation

U.S. MACROECONOMIC SITUATION 4

U.S.Macroeconomic Situation

U.SMacroeconomic Situation

Policymakers are the main regulators of the microeconomic activities inevery economy since they regulate macroeconomic activities. In theUnited States, the major role of policy makers is evaluating themacroeconomic situation and formulating appropriate policies thataddress the state of the economy. In addition, the policies are madeto enhance social welfare of citizens and economic growth. Thecurrent United States macroeconomic situation is in the recoverystate after the 2008 recession period. However, the economy isgaining a gradual growth as evidenced by increasing house sales,reduced mortgage rates and steady increase in demand. The discussionin this paper will evaluate the U.S macroeconomic situation as itrelates to unemployment, inflation and recession.

Unemploymentis currently, the biggest issue facing the economic state of affairsof the U.S economy. Despite recent job creations, the rate ofunemployment is still high with a rate of 6.7, which is a steady rateas it was 6% a decade ago. Before the year 2008, the rate had beenheld at rates lower rate, but the recession year of 2008 has been theturnaround of the rates (U.S. bureau of statistics, 2013). Theproblems befalling the United States economy started with the 2008housing bubble that led to the collapse of financial institutions, inaddition, the economic situation was consistent due to reducedconsumption and trade volumes that create demand for production,which is the driver for employment in an economy.

Interms of inflation, the United States situation is better compared toearlier rates. The recent inflation rate of 2.4% shows improvement ascompared to economic growth rates (U.S. bureau of statistics, 2013).Due to expansionary monetary policies, the economy is expected torecord better balances between inflation and economic growth rates.Economic situation does not seem to get the impact of the inflationdue to the elements of stability of the economy in controllinginflationary pressures. In addition, the economy is still under slowrecovery from the 2008 economic recession.

Tosolve the problem of unemployment, policy makers should adoptexpansionary policies in both fiscal and monetary measures. Inaddition, taxation regulations should be invoked to address economicsituation and improve prospects for future development. To addressthe need for increased consumption, the government should alsoincrease government purchases and transfer payments that will improvethe consumption abilities that will translate to higher demand andproduction levels of the economy. With a cyclic nature of the UnitedStates economic state, especially in regard to unemployment, it isnecessary to implement employ the expansionary measures that willlead to increased production. Due to production levels, industrieswill demand for more workers, which will positively impact onemployment levels.

Despitethe economic fight against recession falling in the hands of theFederal Reserve, it is notable that the economy has not recoveredfrom the 2008 experience. The Federal Reserve continues to addressthe situation by implementing expansionary fiscal and monetarypolicies such as reducing lending rates and regulating lendingrequirements.

Inconclusion, employment is the most significant macroeconomic issuethat challenges the economy of the United States. In addition,inflation and recession join in as the secondary challenges thatimpact on the employment levels and economic growth rates. To solvethese problems, policy makers should adopt expansionary fiscal andmonetary policies. In addition, the government should includepolicies that will promote production and reduce credit levels, whichwill increase employment by increasing consumption and productionlevels.

References

U.S.Bureau of Statistics, 2014.Employment Situation Summary.RetrievedFrom, &lthttp://www.bls.gov/news.release/empsit.nr0.htm&gt April 7,2014