Economic Outlook of United States

Economic Outlook

Introduction

Economic and monetary policy of any country has an important role to play when it come to maintenance of unemployment, inflation and exchange rates. They can be set up to meet few but not all of the goals. Many developing countries like United State that are still recovering from the negative effects of recession might have to face another major downturn and economic crisis in future. The current economic situation of the country is not giving a very positive feedback due to crisis situation faced by many European countries. It has been suggested that continues economic crisis and recession situation in the Europe will definitely affect the economic outlook of American and therefore, immediate actions in terms of new policy reforms must be taken to resolve the issue (Ellsworth, 2012). The developing countries are standing on the brink of another economic downturn as a result of the issues that were left unresolved during the recession of the year 2008-2009. According to the latest figures provided by United Nations the unemployment rate is still lingering on the higher side that is 9 percent. Additionally, the debt crisis that took place in Europe in the second half of the year 2011 is yet another major cause for this slow down of economic growth in countries like America (United Nations, 2011).

Discussion

Economic Outlook

Economic indicators showed no sign of recovery from the negative effects of recession and were quite weak. The personal consumption of the people continued to decrease and remained at 1.4 percent, similar to the month of January. The disposable income grew on yearly basis by only 0.6 percent and unemployment rate was also stagnant and remained at 8.3 percent. The percentage of personal consumptions increased to 1.8 percent in the month of April while the unemployment rate fell to 8.2 percent due to better increased participation of the labor force in United States. The disposable incomes were quite positive in sense that it continued to increase at a stable percentage of 0.6percent but showed no improvement. Personal consumption and disposable income both showed slight improvements in the percentages of growth. The percentage growth in personal consumption grew from 1.8percent to 2 percent in the period of six months from March to August. While the percentage growth in disposable income also improved from 0.3 in March percent to 1.7 percent around August. The percentage reduction in the unemployment rate varied between 8.3 percent to 8.2 percent but showed considerable improvements in the month of July when it reduced to as low as 3.9 percent in case of initial unemployment applications but officially it was still stuck at 8.2 and showed stagnation. The overall analysis of the last six month on the basis of consumer sentiment, disposable income, and unemployment and consumer consumption showed sluggish recovery from negative effects of recession. It was also reported that the housing sector also remained weak and the prices of housing sector continued to decrease which resulted in reduced number of new ...