Current Macro Economic Situation in Usa Essay

839 WordsDec 6, 20124 Pages
Current Macro Economic Situation DEVRY UNIVERSITY 08/24/2012 [pic] I will be writing about the Federal Reserve how they are in control of the interest rates, inflation and also the method they use to keep the nation growth moving. The U.S. recession began in December 2007 and ended in June 2009; however, we are still experiencing post-recession effects. The current macroeconomic situation in the US is that there are worries about the national debt, rising interest rates and a double dip recession. The rising national debt is troubling, because this will have a direct impact on the financial markets and interest rates over the long term. The value of “Dollar” is depreciating every other day. Recently, there have been concerns that if the debt ceiling is not increased, the US government will begin defaulting on its obligations. This is problematic, because it means that interest rates for any kind of Treasury securities will be higher (as a downgrade in their credit rating would be inevitable in this situation). (Watkins, 2011) Rising interest rates are a possibility, because the Federal Open Market Committee was focused on: purchasing Treasury securities, commercial paper and providing ample amounts of liquidity to the financial system. This was a part of an effort to prevent the recession that started in 2007 from becoming worse. Now, that the economy has recovered somewhat, there will be the inevitable unwinding of the stimulus. This means that interest rates will be increasing over the long term. (“Lehman,” 2011) A double dip recession is quickly becoming a probability. This is due to the fact that the federal government and states have been aggressively cutting spending to deal with rising deficits. At the same time, the

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