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What is the "current macroeconomic situation" in the U.S.? Is the U.S. economy...

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yemawe52 | Honors

Posted June 9, 2013 at 8:36 AM via web

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What is the "current macroeconomic situation" in the U.S.? Is the U.S. economy currently concerned about unemployment, inflation, recession?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted June 9, 2013 at 2:05 PM (Answer #1)

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Right now, the United States economy is not at a point where inflation is a serious threat.  Unemployment is a problem.  The country is not in a recession, but it is growing very slowly and this causes the unemployment rate to be higher than it should be.

A country is in a recession if its real Gross Domestic Product (GDP) has been declining for the two most recent quarters (6 months).   This is not the case in the US.  GDP is increasing, albeit at a slow rate.  When the economy is growing only very slowly, there is not generally any worry about inflation because inflation is typically caused (though not always) by too much economic activity and too little unemployment. 

Because the economy is growing very slowly, unemployment is too high.  It is about 7.6% right now, when we have been used to rates that are around 5%.  With the economy growing slowly, there is also concern that it could slip back into a recession, particularly since there is so much economic instability in Europe and because our own Congress is having a hard time devising policies to lower our deficit spending.

Thus, of the options given, the US is worried about unemployment and is worried about slipping into a recession even though we are not in a recession now.

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