Macroeconomic Situation

Leading head : MACROECONOMIC SITUATION IN THE US

The Macroeconomic Situation in the United States and the

Actions of the Federal Reserve (Student 's Name (Name of Institution (Course

The Macroeconomic Situation in the US

The current economic situation in the US is quite delicate . The chaos in financial markets , the plummet in house prices , and the increase in energy prices have combined to slow economic activity . The world economy in 2008 is plagued by more macroeconomic uncertainty than at any other time in the last 25 years . Prices for key commodities such

as oil natural gas , coal , and corn have been rising sharply , prompted in part by rapidly growing demand in China and other developing countries . The two macroeconomic shocks that have hit the US economy in recent years are the sharp rise in commodity prices and the sharp decline in housing prices

Surprisingly , after nearly two decades of relative calm , oil prices shot up to levels never seen before . Other commodities such as natural gas coal , steel , corn , wheat , and rice were followed suit . This resulted because world oil consumption had increased significantly during this same period of extreme price changes

The second major macroeconomic shock is the large decline in housing prices , which plummeted at an ever-increasing rate in the decade before 2006 , but then collapsed by nearly 20 percent over the following two years largely fueled by demand pressures during the new economy ' of the late 1990s , by low interest rates in the 2000s , and by wobbly...