Economic Status Report
Updated: Jul 8
Currently, the economy is quite ticklish, since the Great Recession in 2008, meaning that it is not as predictable and steady as it once was. The economy will forever be changing, but it is important to track it, in order to ensure that we can prevent the undesirable instances which can occur, as much as possible in the future.
One thing which is important, in order to ensure that the economy stays steady, is for the GDP to either increase or stay the same, because the population is constantly increasing. “The US economy grew by an annualized 2 percent in the second quarter of 2019, unrevised from the second estimate and following a 3.1 percent expansion in the previous three-month period” (“United States GDP Growth Rate”).
Sectors Several models predict a recession approaching within the next few years, but a recession does not necessarily mean that circumstance will be as consequential as in 2008. Despite economists’ efforts to prevent undesirable things from happening again, recessions will still occur, yet each one will be different, and hopefully not as drastic. Every time that a problem or inefficiency appears in the economy, we try to learn from it, and study what exactly caused the matter in order to prevent it from occurring again in the future. Even if efforts to prevent a recession do not completely work, the consequences during the recession may not hurt the economy as bad, because there was preparation for the recession.
“Government Spending in the United States averaged 2063.99 USD Billion from 1950 until 2019, reaching an all-time high of 3328.05 USD Billion in the fourth quarter of 2009 and a record low of 599.63 USD Billion in the first quarter of 1950” (“United States Government Spending”). The possible reason for it being so high in 2009, was most likely due to the great recession in 2008, and the attempts to recover from it. As for the current unemployment rate, “The US unemployment rate decreased to 3.5 percent in September 2019 from 3.7 percent in the previous month and above below market expectations of 3.7 percent” (“United States Unemployment Rate”). This is wonderful progress, considering that less than ten years ago in 2009 the unemployment rate was 9.9% (Amadeo), although the fact that 5.8 million Americans are still jobless should not be ignored (“United States Unemployment Rate”). Every jobless American cost the government some amount of money and increases the debt which the United States owes. An employed citizen contributes more money to taxes and consumer spending, than an individual whom is unemployed and reliant upon government funds. “Consumer spending impacts the majority of economic growth in the United States. When people have money to spend, they support the businesses that then hire employees” (Kokemuller). Therefore, it is important for as many citizens in the workforce to be employed, in order to keep government spending reasonable and not increase debt.
In the past, it is proven that during the time when the Federal Reserve lowers interest rates, it can help to promote growth among businesses, and create jobs, as it increases the desire to for firms to take out loans. Although if the interest rates are too low, the Federal Reserve has one less tool which they use during a recession to help things balanced back out.
If an economist is attempting to make predictions concerning the future of the economy, it is important for them to use only the most accurate of information and statistics, when comparing and developing models. Surprisingly, economists are not always agreeable with one another, as they each have developed their own theory and predictions for the economy.
Amadeo, Kimberly. “Compare Today's Unemployment with the Past.” The Balance, The Balance, 2 Oct. 2019, https://www.thebalance.com/unemployment-rate-by-year-3305506#targetText=A Key Economic Indicator,1982 when it reached 10.8%.&targetText=The lowest unemployment rate was 1.2% in 1944.
Kokemuller, Neil. “Why Is a Low Unemployment Rate Good?” Career Trend, https://careertrend.com/about-7393470-low-unemployment-rate-good-.html.
“United States GDP Growth Rate.” United States GDP Growth Rate | 2019 | Data | Chart | Calendar | Forecast, 17 Sept. 2019, https://tradingeconomics.com/united-states/gdp-growth.
“United States Government Spending.” United States Government Spending | 2019 | Data | Chart | Calendar, https://tradingeconomics.com/united-states/government-spending.
“United States Unemployment Rate.” United States Unemployment Rate | 2019 | Data | Chart | Calendar | Forecast, https://tradingeconomics.com/united-states/unemployment-rate.