The Economy Is on a Sugar High Essay

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The United States economy is still baring a prolonged influence of the COVID-19 pandemic and the second wave is predicted to happen soon. The unemployment rates are at their record high, and the effects of the Recession can be felt by every citizen. However, according to the Federal Reserve, it has not reached its peak yet – however, the present factors endangering the economical balance are examined well, along with their potential outcomes.

The effects are evident, albeit they have not unfolded to their full potential yet as the Recession is only expected to come. However, the interest rates have fallen by 0.37%, compared to August parameters, both in Treasury Bond and Treasury Notes (Barone). It is established fact that when a Treasure Auction is not as successful as it could be, the rates are expected to rise – so they downward trend in statistics is counter-intuitive. Retail sales are on the rise – which in turn, is subsequent to $1,200 government stimulus checks as well as “$600 per week unemployment benefits” (Barone). These measures grew personal income (PI) by 12% which resulted in increased spending – mostly on home goods (Barone). In addition to that, new home construction is prospering, contrary to other sectors of the economy. The savings rate also established a new mark – constituting 19% of PI (Barone). Yet, the most heavily discussed topic of the current time in economic circles is the size of the Fed sheet, which as of August 19, is at $7.01 trillion. It saw an 86% (Barone) increase since last year, when it was $3.76 trillion in August 2019.

The pricing of gold, and, subsequently, the value of the dollar is affected by the money stock, which is expected to grow by 42%, according the Fed (Barone). If the trend continues, the dollar is expected to fall significantly in relation to the economies of the rest of the world. The Fed is offering particularly pessimistic prognoses, giving two equally possible outcomes: “the GDP falls, more businesses close, and deflation will rise”, while the other talks about aggregate demand will be greater than inflation due to supply problems (Barone). Thus, in the near future, the economy will take such turn that the Fed will have no choice but to print more money, thereby inducing dollar value and interest rates drop.

Work Cited

Barone, Robert. . Forbes, 2020, Web.

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IvyPanda. (2022, June 27). The Economy Is on a Sugar High. https://ivypanda.com/essays/the-economy-is-on-a-sugar-high/

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"The Economy Is on a Sugar High." IvyPanda, 27 June 2022, ivypanda.com/essays/the-economy-is-on-a-sugar-high/.

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IvyPanda. (2022) 'The Economy Is on a Sugar High'. 27 June.

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IvyPanda. 2022. "The Economy Is on a Sugar High." June 27, 2022. https://ivypanda.com/essays/the-economy-is-on-a-sugar-high/.

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IvyPanda. "The Economy Is on a Sugar High." June 27, 2022. https://ivypanda.com/essays/the-economy-is-on-a-sugar-high/.

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