Current Economy In The United States

1694 Words7 Pages
This presentation seeks to examine as well as inform the audience about the current state of today’s economy in the United States. In particular, the lecture places an emphasis on the economy’s extreme recovery lag in light of the most recent recession and the reasons behind this drastic delay. It seems that the ball was dropped somewhat, so to say, when it comes to the recession of 2008 here in the United States. Furthermore, we are stuck in this slump that is taking a perturbing amount of time to recuperate from. The problem seems to lie within the U.S. economy’s income distribution. Most notably, over the past couple of decades the government’s spending on defense has moved toward and primarily encompassed entitlement spending or social…show more content…
This term refers to the fact that potential GDP could be around $14,400 billion (in 2005 US dollars), but has only slowly increased to a mere $13,500 billion after the recession, as of late 2012 estimates. The United States is “finally back to pre-recession peak employment” as of July 2014. The main issue with this, however, is why has it taken such a significant time to simply get back to the level prior to the recession? It took seven years to bounce back from the 2008 recession, which is notably longer than any of the other Post-World War II recessions. The Congressional Budget Office anticipates that the U.S. economy’s actual GDP will not reach potential GDP until the 2017 third quarter. So, now we are talking about a ten-year lag. It also claims that the U.S. economy will have a forgone output of around 7.5 trillion…show more content…
The simple solution to this plight is to deflate the inflation rate. The Federal Reserve (or Fed for short) has now stopped “forward guidance.” Forward guidance is the policy tools used by the Fed that tires to keep long-term interest rates lower for a longer period than signaled traditionally by promising to keep short-term rates low for a long time. It essentially tries to guide the expectations of market participants about the future path of these rates. The Fed has revised its forward guidance seven times since the recession of

More about Current Economy In The United States

Open Document