Home > Free Essays > Economics > Economic Development > Nation’s Economy

Nation’s Economy Essay

Exclusively available on IvyPanda Available only on IvyPanda
Updated: Apr 25th, 2021

The size of the U.S. gross domestic product in the third quarter of 2018 was approximately $18.7 trillion. The growth is smaller than it was in the second quarter, declining from 4.2% to 3.5%. However, both values are significantly higher than the average growth of the economy since the 2009 recession, which is described as subpar. Both 3.5% and 4.2% are considerable improvements over the 2% rate displayed on average.

The factors that helped increase the nation’s GDP are the increased spending by both the government and the population. Defense outlays grew at a 4.6% rate due to an agreement reached in February that enabled the allocation of approximately $300 billion above the limit set in a 2011 law. Furthermore, the unemployment rate fell to a considerably low value in September, increasing the average household income and enabling a higher flow of money via taxes and purchases. However, the sales performance of numerous firms has been weak, and they have been unable to meet revenue projections. Furthermore, stocks have been falling in the time shortly before the article’s publication, despite their earlier growth.

The government has been increasing its spending over the past year, which has assisted in expanding the nation’s GDP. This move contrasts earlier federal policy, which limited money use to cover the deficits caused by the economic crisis. The previous Democratic administration chose to concentrate its attention on eliminating the weaknesses in the budget over improving the nation’s overall GDP through spending money that the government did not possess. However, the deficits have mostly been addressed or eliminated, and congressional Republicans have been introducing and promoting policies that take a more active approach to the formation of the nation’s economy, which resulted in increased spending and the resulting GDP growth.

The Federal Reserve projects growth rates of 2.5% in 2019 and 2% in 2020, which is lower than the current growth figures. The prognosis is consistent with the opinions of numerous other analysts, who believe that the growth will slow in the future. The Fed is expected not to push its rates significantly higher due to the current inflation rate being lower than the Fund’s target 2%. The Fed changes its rates in direct proportion to the changes in inflation and economic growth. Therefore, this approach could help stocks and would mean that the economic growth and inflation rates should remain stable in the absence of other significant influences.

The Fed attempts to increase and reduce its rates to match the inflation rate.
Figure 1. The Fed attempts to increase and reduce its rates to match the inflation rate.
The Fed's rates dropped drastically as the recession began and started increasing again once the nation recovered.
Figure 2. The Fed’s rates dropped drastically as the recession began and started increasing again once the nation recovered.

The stock market is called a wild card for the economy in the article. This notion is used because the market tends to reflect the state of the nation’s growth, but can undergo unexpected changes and significantly affect the state of the economy. For example, a high performance of stocks may encourage household owners to spend more than they would usually consider the optimal amount, which could have severe adverse consequences for the economy if the market starts declining. Similarly, a weak stock market leads people to spend less, adding to the stagnation of the situation. Furthermore, the stock market tends to be forward-looking due to the long-term nature of shares and bonds, and its state often predicts the economic situation in the near future.

This essay on Nation’s Economy was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.
Removal Request
If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda.
Request the removal

Need a custom Essay sample written from scratch by
professional specifically for you?

Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar

certified writers online

Cite This paper

Select a referencing style:

Reference

IvyPanda. (2021, April 25). Nation’s Economy. Retrieved from https://ivypanda.com/essays/nations-economy/

Work Cited

"Nation’s Economy." IvyPanda, 25 Apr. 2021, ivypanda.com/essays/nations-economy/.

1. IvyPanda. "Nation’s Economy." April 25, 2021. https://ivypanda.com/essays/nations-economy/.


Bibliography


IvyPanda. "Nation’s Economy." April 25, 2021. https://ivypanda.com/essays/nations-economy/.

References

IvyPanda. 2021. "Nation’s Economy." April 25, 2021. https://ivypanda.com/essays/nations-economy/.

References

IvyPanda. (2021) 'Nation’s Economy'. 25 April.

More related papers
Psst... Stuck with your
assignment? 😱
Hellen
Online
Psst... Stuck with your assignment? 😱
Do you need an essay to be done?
What type of assignment 📝 do you need?
How many pages (words) do you need? Let's see if we can help you!