economy discussion and reply

Although the platform of FRED is great for understanding data at any level, I find it pretty hard to navigate, so I decided to just stick with analyzing the United States, which will also hopefully allow me to make more connections from this semester. Since March 2021, the unemployment rate in the United States is at 6 percent, which is lower than what it was in October of 2020, where the unemployment rate was 6.9 percent, so it is promising to see the workforce is expanding which hopefully means there are less discouraged workers in the workforce. The real GDP for quarter 4 of 2020 was 4.23, which is a slight increase since Q3 and a pretty big increase since Q2. As we know from this entire semester, to fully understand macroeconomics, we need to be able to look at economic growth, which is why we look at real GDP. It was to be expected in 2020 that there was going to be some unsteady behavior because of the pandemic, but it is good to see that economic growth is slowly increasing throughout the quarters, and will look promising for Q1 of 2021. In regards to federal debt, from Q1 to Q4 of 2020, there was a pretty noticeable increase, and this is to be expected. In order for the economy to grow, the stimulus needed to roll out so people could feel more comfortable with spending. Just with the whole process, in order for stimulus checks to be rolled out, there was going to be a loan somewhere, and this was seen with federal debt. The hope here is more people will spend which will help with GDP, and from what we have seen so far, that seems to be the case. 

As we have learned throughout the recent modules, the main reason a country will decide to adopt a fiscal policy is to help maintain a growth pattern that will remain sustainable. What we know for this year's fiscal policy is exactly that: the federal government wants to maintain spending throughout the nation, so stimulating the economy now is going to result in higher amounts of debt throughout the rest of the quarters in 2021. What we know about the 2021 Fiscal Policy is that the amount government debt is going to increase and that is fully expected. The Biden Administration has not produced a full outline of tax plans or a more in depth spending plan, so it will be interesting to review in the next few months if a financial plan will produce more federal spending, which will lead to a higher GDP in projecting months. 

In March of 2021, the federal funds rate was maintained from 0.00-0.25% which makes sense when thinking about the two modules we have just discussed. A main goal in the US right now is to gain more consistency throughout the nation, so it would be expected that the federal funds rate would stay in a range that would help to meet a consistent level that is also entact with inflation and employment.

 Though this rate is higher than what some were expecting towards the end of 2020, it is important to have some type of consistency with the market right now, or we could be anticipating another recession, which is not what anyone would want after the quarterly reports of 2020. Having a floor that has a maximum of reaching 0.25 is a way that the federal reserve rates maintain control, but also keeps predictions on track for the rest of the fiscal year. From what I have read for this post, I have not seen any news source that has had any immediate panic for the rest of this fiscal year, but what most things I read (Links to an external site.)  were suggesting that the changes we have already seen in 2021 are going to impact price increases, but nothing past the year of 2023. However, the article states that the decisions made in March were widely expected, which is why I do not think there is too much panic. GDP will continue to increase for 2021, and then cool off in later years. 

The graph I decided to incorporate into my discussion post was the unemployment rate, because this has been something that we have talked about consistently throughout these discussion posts, and I think it is important to acknowledge that the decline we see here is exactly what we were expecting and trying to predict in the beginning of the semester. Getting more people back into the workforce is extremely important, and it was pretty hard for most people to get a job, as those who had far too much experience were now trying to land jobs that normally go to those with little to no experience whatsoever. It is not going to spike quite as much as it did when the pandemic started, but that is also to be expected because not every job is going to return to the workforce as things start opening up again because unfortunately not all businesses survived the pandemic. However, looking at this data should help people start to realize we are just about moving in the right direction, something we have been trying to do for over a year now.