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The Current State of US Economy

The US economy is regarded as the largest and the most diversified economy in
the world. The economy of the US plays a significant role in the world economy.
This means that the state of the US economy can provide an indication of the
current state of the world economy. In macroeconomics, the evaluation of the
current state of US economy considers a number of economic indicators in the
country. This essay evaluates the current state of the US economy based on
three main macroeconomic goals that include economic growth, full employment
and price stability. Furthermore, the evaluation of the current state of the US
economy also considers one alternative measure for the well being of the
economy.
Economic Growth
The economic growth of a country can be measured in terms of gross domestic
product (GDP). It provides the total goods and services that are produced in a
country. The level of economic growth as indicated by a countrys GDP is
important in determining the economic growth of a country. According to the
Bureau of Economic Analysis, the real GDP of the US in the first quarter of 2015
decreased at an annual rate of 0.2 percent. The statistics also shows that real
GDP increased by 2.2 percent in the fourth quarter of 2015 (Bureau of Economic
Analysis 1). The weak first quarter GDP cannot be used to predict the overall
economic growth of US. The contraction of the first quarter GDP is attributed to
the harsh weather condition that negatively affected housing starts and reduced
the consumer spending.
The expenditures related to personal consumption also increased by 2.1 percent
in the first quarter of 2015 and in the fourth quarter it increased by 4.7 percent.
The real exports of goods and services decreased by 5.9percent in the first
quarter while in the fourth quarter it increased by 4.7 percent. The general
statistics shows that there is an improvement of the US economic in 2015 as
indicated by the increase in various economic indicators such as real GDP, real
personal consumption and real investments.
Full Employment
Employment and unemployment rates are useful economic indicators that can
also determine the current economic state of a country. Full employment
indicates that there is an improvement in the economic growth of a country
(Evans et al 59). The unemployment and employment rate can indicate the
growth in jobs and investments in a country (Schmid, et al 206). This also
suggests that there is economic growth in the country. Statistics shows that
there was a good growth of jobs by 223, 000 in June (Bureau of Labor Statistics
1). The unemployment rate also declined to 5.3 percent in June. According to the
Bureau of Labor Statistics, jobs gains in the United States mainly occurred in
business and professional services, retail trade, health care, transportation,

financial activities and warehousing.


The current unemployment rate is lower than the employment rate that was
experienced during the Great Recession and this shows that there is positive
improvement in the wellbeing of the US economy. The labor force participation
statistics shows that there are discrepancies with regards to employment rates of
women, white and Blacks. Women have low labor rate participation in the
country as compared to men. Statistics also shows white women are more
employed than black women. Furthermore, white men have high employment
rate than black men. Although there has been improvement with regards to
employment rate, the Economy of United States is still not at full employment,
this is because there are a number of resources that are still underutilized as well
as the presence of the unemployed individuals in the country.
Price Stability
Price stability is also an important economic indicator that can be used to
evaluate the current state of an economy. The price stability is determined by
the consumer price index (CPI). CPI is a price index that is computed on a
monthly basis by the Bureau of Labor Statistics. The CPI can also used to
determine the inflation rate in a country.
The inflation rate of United States has undergone some changes since the
occurrence of Great Recession. During the Great Recession the inflation rate rose
above 2 percent (Bureau of Economic Analysis 1). The current inflation rate is
below 1perecnt an indication that there has been positive improvement in the
economy of United States. During the Great Recession, it can be argued that
inflation played a role towards determining the economic wellbeing of US. The
major role that inflation played in the US economy during Great Recession was
that it pushed the price levels in the country. As a result the purchasing power of
consumers declined. This further contributed to low aggregate demand in the
economy leading to reduction in economic growth.
Alternative Measures of Economic well being
There are other alternative measures that can be used to determine the
economic wellbeing of a country. Measures of economic well being such as GDP
are subject to some limitations hence it is appropriate to use other alternative
measures of economic growth. The limitations of GDP in measuring the economic
wellbeing of a country include failure to capture the underground economy,
failure to capture changes in quality and the development of new products and
failure to take in account human or leisure costs (Maddison 48).
Alternative measures can also be used to help reduce some of the limitation of
GDP as a measure of economic well being. Other alternative measures include
inequality, poverty rate and interest rates. The best alternative measure that can
also be used to determine the well being of US economy is inequality. The

inequality levels in the US have been increasing over the years an indication that
there is a wide gap between the poor and the rich. According to statistics, the
inequality in the US over the past decades has increased from 7 percent to 22
percent (US Census Bureau 1). The current statistics also shows that 0.1 percent
of the US population owns 22 percent of the total wealth.