Economic Situation in the U.S. As Compared Essay

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economic situation in the U.S. As compared to five (5) years ago. Include interest rates, inflation, and unemployment in the analysis.

Between 2009-2011, 6.1million workers were displaced from jobs that they held for at least 3 years. In 2012, the statistics for employment seemed to be more optimistic: whilst 1,340 mass layoff actions occurred in July, the Bureau of Labor Statistics (http://www.bls.gov/) reported that productivity increased 2.2% in the nonfarm business sector in the second quarter of 2012 whilst in manufacturing, productivity grew 0.1%. During this same year (2012), demand for employment also grew in wholesale trade and retail trade, whilst employment in the food and drink sector remained constant. The jobless rate as a whole this year has also decreased in a large number of areas whilst from April to July alone employment rose from 2.1 million to 19.5 million.

In June, 2012, the Federal Reserve System noted that the economy has been moderately expanding whilst business fixed investment has continued to advance. Household spending also appears to be slowly rising -- more than in earlier years, although less than it did in 2011. The housing sector still remains depressed. Inflation has declined, mainly due to the reduced price of gas and oil, and longer term inflation expectations have remained stable (Board of Governors of the Federal Reserve System).

Interest levels seem to have remained constant at 3.25 between 2011 and 2012. In fact it seems to have historically remained unchanged since 2009 (still constant at 3.25) (Loans and Mortgages). The Prime Rate Interest "is an important index used by banks to set rates on many consumer loan products, such as credit cards or auto loans." Elevation of the prime rate interest means that variable credit card rate will rise too (Wall Street Prime Rate)

The Federal Fund rate too, which is another kind of interest rate has likewise remained constant last noted as being 0.25 in both 2012 and in 2011. The Federal Fund Rate is the "interest rate at which banks and other depository institutions lend money to each other, usually on an overnight basis" the Rate controls the supply of moment hence the level of inflation and other interest rates.

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Raising the rate makes it more expensive to borrow, lowering the supply of money thereby regulating inflation. Lowering the rate has the opposite effect. (Federal Funds Rate)|

Statistics show that inflation rate was at an all-time high in 2008 (5.600%), was lowered to minus in 2009, but has been steadily climbing since although last year was higher (3.629%) than in July of this (1.408%). (Global rates.com Inflation United States - consumer price index (CPI))

Propose two (2) strategies that the federal government could implement that would encourage people to spend more money in order to create employment opportunities. Can Fiscal Monetary Policy website, and Expansionary Monetary Policy website.

The Obama Innovation Strategy may be one way of going about it. They review history and point out that spurts in innovation encouraged people to spend more money leading to further jobs in employment. Obama therefore intends to invest more than $100 billion of Recovery Act funds in order to support innovation.

The project has three parts:

1. Invest in the Building Blocks of American Innovation. -- building and funding the possibility for innovation to occur

2. Promote Competitive Markets that Spur Productive Entrepreneurship. -- encourage the possibility for U.S. entrepreneurs and companies to be globally competitive

3. Catalyze Breakthroughs for National Priorities - using breakthroughs in innovation to help government achieve their priorities. In this way there is reciprocity: Government helps the public in achieving innovation; innovation helps Government. (Nat. Econ. Council).

Another idea -- proposed to the Rochester Business Journal, may be simply to cut the tax rate on manufacturing items. This would encourage people to buy more, hence learning to create further employment opportunities.

A nearly two-thirds majority of respondents to this week's RBJ Daily Report Snap Poll….....

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