Economy the Current Economic Situation in USA Essay

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Economy

The current economic situation in USA is that it is trying to get out of the recession that started in 2008-2009. The biggest challenge has been the high rate of unemployment that still stands at 8.6%. Inflation is not such a worry, as it remains low at around 2%. GDP is also showing some signs of revival. In 2012, the quarterly growth rates were 2%, 1.3%, 3.2% and -0.1%. The decline in Q4 is attributable to slashing of government spending as part of Federal military spending. The overall rates stands at 2.2%, higher than 1.8% for 2011, but marginally lower than 2.4% for 2010. In this sense the economy is recovering, albeit slowly.

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Behind this recovery is a series of monetary and fiscal policy measures that has been undertaken since 2009. The FED and FOMC have kept rate of interest near zero, along with a low inflation rate that is below 2%. The FED has also increased money supply through its Quantitative Easing programs continuously. On the fiscal side, government increased its spending continuously till the fiscal deficit reached record highs in 2010. This partially explains a higher inflation rate as well as a higher GDP rate for that year. Such fiscal programs include

A package worth $158 billion that involved tax cuts signed by President George.....

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