Economics Analysis of the US Economy (2004-2013)

Question: Describe about product output performance analysis and labour market analysis and price level analysis? Answer: Introduction The United States is regarded as the largest economy throughout the world. The US represents and forms 22% of global nominal GDP and around 17% of global GDP. The currency of the US which is the US dollar is the popular currency which is used for international transactions and is regarded as the reserve currency. The characteristics of the US economy can be defined as a mixed economy. The economy of the US has depicted to be stable in terms of GDP rate of growth, unemployment rate was moderate and the economy has experienced huge level of capital investments. (Data.worldbank.org, 2015) Product output performance analysis: GDP annual growth rate: The annual GDP growth rate in the country was averaged around 3.24 per cent, estimated from the year 1948 to 2014. The highest GDP annual growth rate was experienced in the year 1950 which was about 13.4 per cent and the lowest GDP annual growth rate was as low as -4.1 per cent for the year 2009 in the second quarter. This annual growth rate of GDP for the country US is estimated and reported by the US Bureau of Economic Analysis. (Tradingeconomics.com, 2015) From the chart we see that the lowest annual GDP growth rate is shown in the year 2009 and the overall rate is somewhat stable and consistent. This shows that the US is ranked at the first country to have the highest GDP. Based on the GDP growth rate we see decline in more than one year. As from the chart we conclude that GDP growth rate was negative in the years 2008, 2009 and 2011 which infers that the decline in the GDP growth rate is due to the upturn in the volume of imports, decline in the government spending and also a low level of investment during these years. (Tradingeconomics.com, 2015) As depicted from the chart that the lowest GDP per capita had occurred in the years 2005 and 2010. The highest GDP per capita is found to be in the year 2018 which is around 45431 (in US Dollar at Constant Prices). (Tradingeconomics.com, 2015) This also attributed to the fact the there was substantial increase in the level of imports in the years when the GDP per Capita is quite low. Labour market analysis and price level analysis: The labour market analysis can be made based on the level of unemployment in the economy. The unemployment rate measures the number people who are not working but are seeking for job. The unemployment rate is the percentage of the labor force. Over the years we see that the unemployment rate was quite low for the years 2004 to 2008. But from the year 2009 to where the unemployment rate was highest in the year 2010, the rate seemed not top barge from the high levels. This reveals that the people who are not getting jobs or people who have lost their jobs are high during these years. This can be interpreted as the reason behind the decline in the level of GDP for these same years. We have already stated that for these years, the level of capital investment declined. This meant that there was no substantial generation of job opportunities in the economy which reveals that people of the US was not getting jobs and thus remained unemployed. This drove the rate of unemployment high in these years especially in the year2009-2010. (Tradingeconomics.com, 2015) The chart reveals that the labour force participation is declining from the year 2004 to 2013. The lowest labour force participation would be for the years after 2013. But another striking feature of this graph is that the rate is somewhat consistent from the year 2005 to 2008 thereafter the rate has declined. The economy the US was down turning in most aspects which brought about a lot of stagnation in the economy. This was followed by the low investment rate and the increase in the unemployment rate that depicted the decline in the labour force participation. (Tradingeconomics.com, 2015) The growth in wages has also revealed the same type of trend. The wage growth is negative for the year 2009 when the GDP had declined and the unemployment rate was low. Since the economy was not in a good situation to attract investment and generate job opportunities. This took a toll in lowering the wage rate to attract workers so that they join the jobs rather than sit idle and do nothing. Thus, the wage declined resulting in a negative wage growth. (Tradingeconomics.com, 2015) Considering the conditions of the economy the price level is an important indicator of the development of the economy of the US. The chart shows that the year 2009 has seen a fall in the inflation rate and the highest rate of inflation is depicted in the year 2008. We can say that there was drastic change in the overall price index within a short span of time between the years 2008 and 2009. (Tradingeconomics.com, 2015) The consumer price index for the years 2004 to 2013 has revealed interesting characteristics. The consumer price index is seen rising for the following years. Now consumer price index actually measures the changes in the price level of a basket of goods purchased by individuals for a period of time. From the calculation of the consumer price index we can measure the inflation rate. But the inflation rate has shown rather a same result. Inflation rate has declined in the year 2009 and so did the consumer price index which has also slightly declined in the year 2009. The graph for consumer price index and the inflation rate is somewhat identical. (Tradingeconomics.com, 2015) Conclusion Analysis the data from the years 2004 to 2013 reveals that the US has experienced downfall during the year 2008-2009. During the year the GDP growth rate, GDP per capita and even the wage growth rate was quite low. Considering the price level analysis the consumer price index and the inflation rate has also declined in this year. The labour market conditions tell us that the unemployment rate and the labour force participation is quite low. Thus, we can say that the economy of the US was more or less consistent over the years 2004 to 2013 except for the year 2009 in which the economy of the US was down. References Data.worldbank.org, (2015).United States | Data. [online] Available at: https://data.worldbank.org/country/united-states [Accessed 12 Mar. 2015]. Tradingeconomics.com, (2015).United States Consumer Price Index (CPI) | 1950-2015 | Data | Chart. [online] Available at: https://www.tradingeconomics.com/united-states/consumer-price-index-cpi [Accessed 12 Mar. 2015]. Tradingeconomics.com, (2015).United States GDP Annual Growth Rate | 1948-2015 | Data | Chart | Calendar. [online] Available at: https://www.tradingeconomics.com/united-states/gdp-growth-annual [Accessed 12 Mar. 2015]. Tradingeconomics.com, (2015).United States GDP Growth Rate | 1947-2015 | Data | Chart | Calendar. [online] Available at: https://www.tradingeconomics.com/united-states/gdp-growth [Accessed 12 Mar. 2015]. Tradingeconomics.com, (2015).United States GDP per capita | 1960-2015 | Data | Chart | Calendar. [online] Available at: https://www.tradingeconomics.com/united-states/gdp-per-capita [Accessed 12 Mar. 2015]. Tradingeconomics.com, (2015).United States Inflation Rate | 1914-2015 | Data | Chart | Calendar. [online] Available at: https://www.tradingeconomics.com/united-states/inflation-cpi [Accessed 12 Mar. 2015]. Tradingeconomics.com, (2015).United States Labor Force Participation Rate | 1950-2015 | Data | Chart. [online] Available at: https://www.tradingeconomics.com/united-states/labor-force-participation-rate [Accessed 12 Mar. 2015]. Tradingeconomics.com, (2015).United States Unemployment Rate | 1948-2015 | Data | Chart | Calendar. [online] Available at: https://www.tradingeconomics.com/united-states/unemployment-rate [Accessed 12 Mar. 2015]. Tradingeconomics.com, (2015).United States Wages and Salaries Growth | 1960-2015 | Data | Chart. [online] Available at: https://www.tradingeconomics.com/united-states/wage-growth [Accessed 12 Mar. 2015].