what is the current macroeconomic situation in the United St

what is the current macroeconomic situation in the United States?

Solution

Currently, United States economy is still, so far as we know, still in an expansion (since June of 2009). However, it is not a matter of concern as it might not be for long. As it has been relatively weak and inconsistent and so the main worry is unemployment and not inflation. This means that an easier monetary policy will be appropriate just like an expansionary fiscal policy.

As shown by numbers that the economy contracted slightly in the first quarter of 2015, but still it does not mean that recession has started as contraction has to be there for two straight quarters. So this means economy is still in expansion phase.

Unemployment has not dropped much as expected and wages are consistent and not really going up very strongly. This means that inflation is not a threat at this point of time. The major concern is to avoid recession and unemployment. Keeping this concern in mind, an easy monetary policy is preferable along with low interest rates and should engage in buying government securities on the open market. In terms of fiscal policy, taxes should not be hiked and government spending also should not be increased as well.