Economic Forecast Paper

Topics: Monetary policy, Inflation, Great Depression Pages: 4 (1175 words) Published: March 14, 2012

The US economy is expected to grow at a really slow pace given the fiscal outlook and government cuts in spending. It is unlikely that there will be a government stimulus package in 2012 and the reason being a divisive politics in congress and also the piling up of the public debt. Fiscal policy in the past years helped to stimulate the economy especially after the inauguration of Barack Obama. Obama signed into law 787 billion dollar stimulus package in 2009 and helped the economy to gain a boost. The following year the economy stayed kind neutral and in 2011 it was slowing down and losing points gained in the previous years. In 2012 economists are looking forward to the decisions made by government. If the Obama stimulus package that’s about creating jobs, cutting taxes on the middle class people and taxing the rich more will help to neutralize the economy. But that’s unlikely and it will have dragged the current economy to its lowest in three years.

The European Debt Crisis
The Economic health of Europe is important to the prosperity of US. Europe's ills already have damaged some U.S. interests, from multinational companies to major exporters. Individual investors have many reasons for concern, as the enthusiasm from earlier debt agreements has given way to pessimism and stock market dives. If the U.S. economy takes such a turn into 2012, Europe's financial troubles could wind up affecting the U.S. presidential election. Big American banks have outstanding loans of about $ 700 billion in Europe and in the case of a default that means a disaster for both Europe and The US. More than 20% of all U.S. exports go to Europe, making it the nation's largest trading partner. About 14% go to the 17 Eurozone countries. The real worry for U.S. business is that financial panic might cause a broad recession throughout the Eurozone, quelling the appetites of French and German consumers and businesses for U.S. products....
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