Current Macroeconomic Situation Research Paper Example | Topics and Well Written Essays - 500 words

Current Macroeconomic Situation - Research Paper Example A problem that the global recession created which the U.S economy has not been able to manage well is an explosion in the unemployment rate. The unemployment rate in the U.S. traditionally used to be under 5%. The unemployment rate reached double figures in 2010 for the first time in decades. During the last few months the U.S. has gone down a bit which is a positive sign. The creation of jobs is very important for the economy because it provides much needed income to many American families. The graph below shows the movement in the U.S. unemployment rate during the past nine months. The United States population has not had any problems with inflation in recent history. Economies that suffer from inflation are problematic because inflation diminishes the purchasing power of money. A rise in inflation is also bad because it increases the cost of acquiring money from banks and lending institutions. Investors are not attracted by economies that suffer from inflationary tendencies. During 2009 and 2010 the inflation rate in the United States was a very low 0.92% and 1% (Countrywatch, 2012). A problem the U.S economy faces which affects the long term well being of its entire population is its overall deficit. The deficit of the Unites States is growing every year due to three factors. The three factors that are increasing the total debt of America are budget deficits, trade deficit, and a lack of savings. During the past 40 years the U.S has only been able to achieve a budgetary surplus five times. The deficits keep accumulating themselves year after year. The U.S also has the largest trade deficit in the world. In January 2012 the U.S economy generated $180.6 billion in exports and $233.4 billion in imports (Tradeeconomics, 2012). The end result was that the U.S. started the year by accumulating a trade deficit of $52.3 billion in January 2012. The United States fiscal policy should focus on expansionary policies. The