Economy the Current Real GDP Growth Is Essay

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Economy

The current real GDP growth is just under 2% annually. At this point last year it was in the 3.5-4% range. The trend is declining. The unemployment rate is just above 9%. A year ago is was just below 10%. However, unemployment is increasing at present. The CPI (headline number) is just over 3%, whereas a year ago it was below 2%. The trend is increasing. Interest rates are near zero for short-term paper and just over 3% for long-term debt. Both rates are similar to a year ago. Long-term rates are on a downward trend while short-term rates are flatlined. Industrial production is up around 4% from the year previous, whereas a year ago it was over 6% higher than the previous year. The trend is declining, although in this case the denominator is increasing, so it is not unexpected that the trend would be declining.

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Industrial production was so low in 2009 that the improvements in 2010 looked good, even though they were simply fighting to restore the production lost during the depths of the recession.

The overall health of the economy, based on these indicators, is not good. Unemployment is persistently high, and responds to stimulus only in the short run. Interest rates are very low, so there is little that the Fed can do about stimulating the economy by changing the cost of borrowing. Worse, inflation is beginning to increase. This reflects global demand exerting pressures on prices of goods in the U.S. (oil, for example). With higher inflation, buying power is reduced, and this will hurt the recovery.

2. The economy is in a general state of decline. In the past couple of years, the recovery effort has stalled. Gains made in 2010 were temporary. The economy is failing.....

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