U.S. Economy

Assignment

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American government and Fed role toward economic improvement in last two years

The American government and the Federal Reserve (Fed) took it as their prime responsibility to ensure that the U.S. economy grows with the anticipated growth targets. In this regard, various fiscal and monetary policy measures are taken. Over the past two years, Fed and the federal government direction has been to recover from the aftermath of the financial crisis developed in 2008.

By the time Barack Obama was elected in 2008, the American economy was experiencing its worst recession in over sixty years. The response of Obama and the Democratic Congress was swift and monumental. At Obama's request, Congress passed the largest single stimulus spending package in the history of the United States.

Nominally set at $787 billion over two years, the eventual cost, by some calculations, will exceed $1 trillion. The Congressional Budget Office (CBO), which reports to the Democrats in Congress, has estimated that Obama's policies will have resulted in a federal budget deficit of $1.6 trillion in 2009. That is more than 10 percent of GDP. Ominously, the deficit would stay at about 5 percent of GDP all the way through 2019. That means large budget deficits even when the Great Recession is over (ALBUQUERQUE 2009). The following graph illustrates the economic performance spanning the quarters of period 2004 to 2008. The marked decline in GDP percentage is evident of the decreasing U.S. economic trend.

Driven by rising consumption, growth has strengthened the United States in 2010, allowing the gross domestic product (GDP) to return to its pre-crisis, according to official figures released Washington. Over the whole year, GDP in the world's largest economy grew 2.9% over 2009, reaching 14.66 trillion dollars (BEA Accounts 2010). The gross domestic product has met its losses of the recession in December 2007-June 2009 because he had stagnated in 2008 before declining by 2.6% in 2009. Economic growth accelerated sharply in the fourth quarter due to household consumption and exports, primarily, but also business investment. It increased 4.4%, driven by spending on equipment and software, which fell for the seventh consecutive quarter of growth. In 2009, IMF held a different view of how the U.S. economy was directed. According to IMF press release, the recovery would not intervene in the United States before 2010 and they would see their economy stagnate in 2009, according to forecasts by the International Monetary Fund (Treeck 2009). In real terms, ie adjusted for inflation, U.S. GDP has established a new record in the fourth quarter, erasing the one that occurred during autumn 2007, before the collapse of the economy. These figures emerge, however, below expectations. President Barack Obama has chosen to focus his speech on the annual State of the Union on the economy, calling for a partial freeze on government spending and calling on businesses to invest and innovate to start hiring and strengthening competitiveness the U.S. economy. The commission of inquiry into the financial crisis has also made ??long-awaited report on the causes ...