The current macroeconomic situation in the US can be termed and described as stable recovery. It should be known that various insolvencies that had been experienced are falling and this is good as far as the economy is concerned. The economy has been on a positive recovery since the second quarter of 2009. As much as 2010 was somehow dull, this is not expected in 2011. The Federal Reserve has maintained low-interest rates and this has been a plus to the economy. Virulent inflation has brought a lot of panic on commodity prices and these need to be looked at. Prices are rising very drastically yet salaries have not been enhanced. The country’s gross domestic product is already off to a slow start at 2.0% and this is not good (Rushe, 2011, p. 12). The real GDP can be put slightly above 1% in the coming months. Unemployment rate has been falling from December 2010 when it was recorded at 9.7% to 8.8% in March (Trading Economics, 2011, p. 8).
All the indicators show that the country’s economy is improving and this is based on various economic indicators. As much as good growth in GDP and stock markets is positive, it is not enough to enhance the whole economy. The only issue as far as this economy is concerned revolves around job creation and unemployment that need to be tackled. The economy has low demand because of confidence levels that are at their lowest. In this case, prices are being driven up by the market. February 2011 had an inflation rate of 2.11% and this was up from January’s inflation of 1.63% (Economy watch, 2011, p. 23). As much as many companies have job openings and money, they have not been quick to react as expected. Demand needs to be addressed for the economy to record significant growth.
It is undeniable that the Federal Reserve and the Congress have been instrumental in correcting the markets. The Federal Reserve has kept interest rates low and this has broadly helped the economy. The Federal Reserve will continue to play a biog role in coming years. This is based on the assumption that the economy might be buffeted by events beyond its control. Congress has also done a good job by not spooking. This is as far as markets are concerned. The Federal Reserve has always left the market guessing and this is good because if they knew that rates would go up, the economy could have slipped into another recession (Crutsinger, 2011, p. 18). In this case, it will be advisable for the Federal Reserve to continue keeping low-interest rates for long-term sustainability.
The major concerns should be security bubbles and inflation that have far-reaching implications on the economy. There has been speculation that the Federal Reserve might raise rates but this is not known. Because the Fed derives its authority from the congress, it is good that they work together for long term sustainability. All along, the Federal Reserve should ensure that inflation is well controlled. Any skyrocketing levels of inflation can return the country to recession because this has been proven beyond reasonable doubt (Rushe, 2011, p. 29). The federal reserves stimulative policy has broadly helped the economy and congress has pilled pressure for this to be enforced. Congress issued some stimulus spending before but this is not expected in coming months as the economy is picking up.
Reference list
Crutsinger, M. (2011). Economic growth picked up speed at the end of last year. Web.
Economy watch. (2011). US Economic Growth. Web.
Rushe, D. (2011). Financial crisis was ‘avoidable’, says official US report. New York: Guardian.
Trading Economics. (2011). United States GDP Growth Rate. Web.