the Current State of the Economy

The Current State of the Economy The economic goals of an economy are economic growth, low inflation and high employment. The current unemployment rate is 7. 2 percent (www. bls. gov). However, what would the real unemployment rate be, if we tried to include some of those others who don’t fit into its “unemployed” check box. How many Americans are hardly working, or aren’t working at all, or would love to take a full-time Job? 1 1. 7 percent, or 18. million unemployed Americans (http://Jobs. aol. com/articles/2013/04/05/real- nemployment-rate/#! slide=852498). The current inflation rate in the United States was recorded at 1. 50 percent in August of 2013. Inflation Rate in the United States is reported by the Bureau of Labor Statistics. Inflation, currently is low, but with the Quantum easy program the Federal Reserve has been implementing inflation is sure to skyrocket as soon as next year. One billion dollars every single day.

That is the rough measure of the benefit the U. S. economy is estimated to receive by the end of his year thanks to the development of new supplies of oil and natural gas, according to a new analysis, and Merrill Lynch claims raw gains from domestic energy supplies were $900 million per day in April – a 1,300 percent increase from $70 million per day in January 2010. By the end of 2012, Merrill Lynch expects the daily gains from domestic supplies to be over $1 billion.

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If the current United States government administration does not choke any more economic growth by more regulation and higher taxes the economic growth has a chance to continue to grow. In terms of the business cycle our economy will experience a contraction with the implementation of the affordable care act and the Affordable Care Act “doubles down” on many of the worst aspects of our current system, while adding new cost pressures and problems that will serve as a drag on economic growth and Job creation for years to come.

Affordable Care Act is much more likely to increase the deficit than reduce it; explain how the mandates, taxes, and penalties that it imposes on insurers and employers ill increase health care costs and decrease employment; and conclude by exploring the negative effects of regulatory uncertainty at a time when companies are sitting on trillions of dollars in cash that could be used for Job creation (Congressional Budget Office, The Budget and Economic Outlook: An Update.

August 2010 p. 6) In conclusion I believe the Federal Reserve has set the United States up for the QE “trap”. This will happen when the central bank has purchased long-term government bonds as part of quantitative easing. Initially, long-term interest rates fall much more than they ould in a country without such a policy, which means the subsequent economic recovery comes sooner.

But as the economy picks up, long-term rates rise sharply as local bond market participants fear the central bank will have to mop up all the excess reserves by unloading its holdings of long-term bonds. Then demand falls in interest rate sensitive sectors such as automobiles and housing, causing the economy to slow and forcing the central bank to relax its policy stance. The economy heads towards recovery again, but as market participants refocus on the possibility of

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