Macroeconimics Milestone 3
brownc8
MacroeconomicMilestone2.pptx
Macroeconomic Data Report
China Brown
Southern New Hampshire University
Gross Domestic Product (GDP) and Growth From 2005-2014
Fluctuation in the U.S. GDP growth rate
U.S. GDP growth rate has alternate phases of increase and decrease
2008 had a GDP growth rate drastic decline
Both 2008 and 2009 have recession and depression, respectively
| Year | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
| GDP growth rate | 3.4 | 2.7 | 1.8 | -0.3 | -2.8 | 2.5 | 1.6 | 2.2 | 1.7 | 2.4 |
The graph infers that there is a fluctuation in the GDP growth rate in US. There is an alternate phase of increase and decrease in the GDP growth rate. There is a drastic downfall in the GDP growth rate in the year 2008 followed by a greater reduction in year 2009 (Kalaš et al., 2017). Estimating the impact of taxes on the economic growth in the United States. Economic Themes, 55(4), 481-499.This is due to the phase of business cycle the economy passed through. There is a phase of recession followed by depression which the US economy passed through in the year 2008 and 2009.
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Continued
At expansion phase, central bank give loans to commercial banks
At peaks, banks charge high interest rates
At recession, people get discouraged to borrow from banks
At depression, loss of economic and differential activity
At trough, central bank lowers interest rates
At recovery, commercial banks give loans at low interest
During the Recession period, the financial institutions such as banks become doubtful and indicate indifferent perspective towards giving loans to entrepreneurs to start new business ventures (Kalaš et al., 2017). As a result, the unemployment rate increases, resulting to low standard of living and finally thus low overall demand. The end result is low growth rate of the country’s GDP. Primarily, the stages of economic cycle are prosperity (expansion), peak, recession, depression, trough, and recovery.
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Inflation and Unemployment In The U.S. From 2005 - 2014
The U.S. 10-year fluctuation in inflation
Monetary, fiscal, and price are inflation control measures
High population growth, high unemployment rates
| Year | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
| Inflation | 3.42 | 2.54 | 4.08 | 0.09 | 2.72 | 1.5 | 2.96 | 1.74 | 1.5 | 0.76 |
The graph infers that the U.S. experienced fluctuation in inflation rate from 2005 to 2014, ten consecutive years. The population has increased in the past years because of immigrants looking for job opportunities. As a result, the demand of the goods and services increase leading to rise of commodity prices. This situation is demand pull inflation. During recession and recovery economic stages, the U.S. federal government attempted to control inflation by implementing control measures (Ciggiano et al., 2014). The U.S. government’s effective measures of monetary, fiscal, and price to control inflation. By controlling the cost of products and offering subsidies on the produced goods, the inflation gets controlled.
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Unemployment in US from 2005 -2014
Low employment opportunities
2010 had the highest unemployment rate, 9%
High rate, high dependency level
| Year | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
| Rate (%) | 5.3 | 4.7 | 4.6 | 5 | 7.8 | 9.8 | 9.1 | 8.3 | 8 | 6.6 |
From the table and graph, it is evident that the United States has experience increasing rate of unemployment from 2005-2014 (Ciggiano et al., 2014). The population has for those ten years increased due to immigrants coming into the United States to look for the jobs. Consequently, the available job opportunities cannot meet the high demand from increased population, thus many citizens remain unemployed and dependency rate increase.
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Interest Rate Fluctuations
Increased investment and foreign trade
Increased supply and demand for credit
Increased GDP rate due employment opportunities
December 13, 2005 7.25
January 31, 2006 7.50
March 28, 2006 7.75
May 10, 2006 8.00
June 29, 2006 8.25
September 18, 2007 7.75
October 31, 2007 7.50
December 11, 2007 7.25
January 22, 2008 6.50
January 30, 2008 6.00
March 18, 2008 5.25
April 30, 2008 5.00
October 8, 2008 4.50
October 29, 2008 4.00
December 16, 2008 3.25
The federal government of the United States reduced interest rate to make it easy for entrepreneurs and other people have easy access of loans to improve and enhance their new entrepreneurial ventures and to generate new employment opportunities that lead to increased GDP (Ciggiano et al., 2014). As a result of this reduced interest rate, loans are available to most people and thus the demand of population increases. This loan availability due to low interest rates in turn leads to demand pull inflation. Investment and foreign trade rate thus increase as there is easy availability of loans for promoting the manufacturing and the economy’s GDP.
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References
Caggiano, G., Castelnuovo, E., & Groshenny, N. (2014). Uncertainty shocks and unemployment dynamics in US recessions. Journal of Monetary Economics, 67, 78-92.
Kalaš, B., Mirović, V., & Andrašić, J. (2017). Estimating the impact of taxes on the economic growth in the United States. Economic Themes, 55(4), 481-499.
