MACRO-ECONOMY US

Macro-Economy US

Macroeconomic Situation in the US

Introduction

The American government and the Federal Reserve (Fed) took it as their prime responsibility to ensure that the U.S. economy grows with the anticipated growth targets. In this regard, various fiscal and monetary policy measures are taken. Over the past two years, Fed and the federal government direction has been to recover from the aftermath of the financial crisis developed in 2008 (DATAMONITOR, 2010).

By the time Barack Obama was elected in 2008, the American economy had been experiencing its worst recession in over sixty years. The response of Obama and the Democratic Congress was swift and monumental. At Obama's request, Congress passed the largest single stimulus spending package in the history of the United States.

This paper aims at discussing the current trends in the macro-environment of the US economy and the various forces and factors that are shaping its direction. The paper takes into account the different reforms and measures introduced in various sectors of the economy that may have a direct impact on the overall macroeconomic situation.

Discussion

Nominally set at $787 billion over two years, the eventual cost, by some calculations, will exceed $1 trillion. The Congressional Budget Office (CBO), which reports to the Democrats in Congress, has estimated that Obama's policies will have resulted in a federal budget deficit of $1.6 trillion in 2009. That is more than 10 percent of GDP. Ominously, the deficit would stay at about 5 percent of GDP all the way through 2019. That means massive budget deficits even when the Great Recession is over (ALBUQUERQUE, 2009).

Driven by rising consumption, growth has strengthened the United States in 2010, allowing the gross domestic product (GDP) to return to its pre-crisis, according to official figures released Washington. Over the whole year, GDP in the world's largest economy grew 2.9% over 2009, reaching 14.66 trillion dollars (BEA Accounts, 2010). The gross domestic product met its losses of the recession in December 2007-June 2009 because it had stagnated in 2008 before declining by 2.6% in 2009.

In real terms, i.e. adjusted for inflation, U.S. GDP has established a new record in the fourth quarter, erasing the one that occurred during autumn 2007, before the collapse of the economy. These figures emerge, however, below expectations (Kahn, 2010). The commission of inquiry into the financial crisis has also made long-awaited report on the causes of the crisis and the conclusions to be drawn to avoid a ...