Economics in the United States
Macroeconomics in the United States
Macroeconomics deals with the general economic systems, which have a to individuals and markets. Essentially, microeconomics is mainly used in the determination and forecast of a country’s national income. This is done by analyzing the factors of the economy that represent trends and patterns and in most cases influence each other. Economic factors affecting macroeconomics include the rates of employment and unemployment, positions of balance of payments, trends in Gross Domestic Product (GDP) and inflation. Macroeconomics is controlled by the monetary and fiscal policies, which are implemented to control economic factors. Levels of investment and consumption of products and services is also determined by fiscal and monetary policies.
Microeconomic situation in the United States
Figure 1.1: Trends (in percentage) of Unemployment in the U.S. — 2012
2012
March
April
May
Changes from April to May
Total for 16 years and Above
8.2
8.1
8.2
0.1
Adults (Men)
7.6
7.5
7.8
0.3
Adults (Women)
7.4
7.4
7.4
0.0
Teenagers between 16-19 Years
25.0
24.9
24.6
-0.3
Whites
7.3
7.4
7.4
0.0
African-American
14.0
13.0
13.6
0.6
Total for 25 years and Over
6.8
6.8
6.9
0.1
Less than high school diplomas
12.6
12.5
13.0
0.5
High school certificate-no college
8.0
7.9
8.1
0.2
7.5
7.6
7.9
0.3
Bachelor’s degree
4.2
4.0
3.9
-0.1
With the current survey in U.S., it is evident that the most affected with the unemployment are teenagers, African-Americans and those without college or bachelor degrees.
Probable causes of unemployment
The population growth rate is rising at a terrific pace, leading to higher unemployment rates. As the population increases, the job opportunities are not hence leading to excess labor and limited spaces for work. The government has to take action and provide for jobs in diverse sectors of the economy, to accommodate the unemployed.
with foreign countries, in industry and firms. This has caused inability in terms of financing the firms. The result is often winding up or liquidation. Closure of the firms and industries leads to job loss hence high unemployment rates.
Currently, the country is undergoing immense technological change which has caused automation in the industries and manufacturing firms. Most production facilities are automated and the manpower required is minimal. The human labor is, therefore, being replaced with mechanical equipments. The for employees is way below the value of other countries, leading to decisions of the citizens to remain unemployed.
Also, young people in the country are more enlightened than they were before, and prefer to better their education and professionalism, rather than work. This has increased, though with small margins, the rate of unemployment.
Inflation in the United States
The inflation rate in the United States is likely to be affected by the recession experienced in Europe. The growth rate of China which has also reduced will be an advantage for the U.S. Due to the favorable oil prices and the government incentive to moderate the prices of household commodities like food, the inflation rate of U.S. has a high probability of reducing. The labor cost of the country is quite restrained, hence in check CPI index.
Figure 1.2: Expected percentage change since 2010
Percentage changes from 2010 to 2013 — predictions (Newport, 2011).
In April 2012, the rate of inflation for the country was 2.30%. The inflation rate is realized after analysis of the CPI index, which measures the prices of consumers, and also the GDP growth, which deals with the entire domestic economy of the country. Since February 2011, the inflation of United States has stabilized a little in April, showing efficiency in the measures taken to curb inflation. These include the monetary and fiscal measures (Markham, 2002).
Fiscal and Monetary tools
The monetary policy is said to be expansionary in situations where the supply of money in the existing market increases. In the U.S. The tool is used to combat unemployment, especially during a recession, by deliberate reduction of the interest rates. However, in times of contractionary policy, the interest rates are increased to discourage acquisition of money from banks, which causes excess money supplies in the market. In case the banks and other credit institutions are allowing small interests rates, then the situation can be referred to as cheap money. Dear money is a situation where the credit institutions allow high interest rates, so as to reduce the ability to borrow money (Fernando, 2011).
Contrary to the monetary aspects, the fiscal policy concentrates on spending and borrowing of the state. The government restrains borrowing money when there is excessive money supply, to curb inflation (Fernando, 2011).
Conclusion
Though still unstable, the economy of the United States of America has seen drastic improvements compared to the previous years. This has a thing to do with the tools used to curb inflation, including the monetary and fiscal policies. There is also better management of funds, though the control of the central bank, reducing manmade inflation.
References
Markham, J.W. (2002). A Financial History of the United States M.E. Sharpe: New York.
Fernando, A.C. (2011). Business Environment. India: Pearson Education.
Newport, P. (2011). United States. United States Country Monitor, 2011, p. 2-7.
U.S Department of Labor (2012, June 1). The Employment Situation. Retrieved June 5, 2012, from http://www.bls.gov/news.release/pdf/empsit.pdf
