Macroeconomic Situation

Running head : MACROECONOMICS SITUATION

Macroeconomic Situation

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Macroeconomic Situation

From 2005 up to the present , critically evaluating the performance of the US economy , it is clear that despite of the down turns in some of the industries in the market , the economy managed to experience growth There are a lot of reasons why the economic growth was attained by US for the past years . After the economic recessions that happened a few years back , the US economy is fighting back in not to experience the said kind of

turmoil . One of the said contributors of US economic growth would be the increasing consumption level of the consumer group as the consequence of the raise on their disposable income in 2005 (Bernanke , 2007 . Due to this said increase in the consumption of the consumers , GDP of the country improves since consumption is one of its major components . Aside from the improvement of the consumption of the consumers , the booming of the private industries helps the economy in terms of improving the domestic market , thus making them profitable . As these private firms become more profitable , the government receives more tax revenues from them which , in return , solve the issue regarding the budget deficit of the government . More public projects are currently made to the public and additional jobs are being created because of this and the booming of the private firms (DeGroat , 2005

On the other hand , one the contributors of the slowing down of the growth of the US economy would be the sluggish growth in the housing industry which has a profound effects in the financial industry of the country (Hobson , 2005 . With this , real estate firms start to gain losses and began to experience stagnant sales due to the early and excessive spending of the consumer group into the housing industry in 2005 . Aside from the downturns in the housing industry , another economic problem that has been slowing down the growth of the US economy would be the rising inflation rate of basic and major commodities due to the oil price hike in the market see appendix . The said inflation depletes the purchasing power of the consumers but at the end of the day , the volume of the consumption of the consumer groups exceeded the negative effects of the said inflation rate

As for the Federal Reserves , one of the possible ways to solve this problem would be to use their currency reserves to artificially appreciate their currency leaving the domestic oil companies to spend less in the volume of oils that they are importing in the international market . Another solution to the said problems of the economy would be to lower down the interests on borrowing that will be spend on housing industry . With this , the financial market would end up revitalizing the housing industry by increasing the purchasing power of the consumers through lending money to them

Appendix

References

Bernanke , B . S (2007 . Semiannual Monetary Policy Report to the Congress . Retrieved December 14 , 2007 , from...