Economic Critique Paper
Learning Team C - Nickolas Keiper, Victus McDaniel, & Michael Walker ECO/372
October 21, 2014
Dr. Thomas Seel
We, a group of international reporters have been tasked with describing and critiquing the current state of the U.S. economy. To do this we will examine unemployment, future expectations, consumer income, and interest rates. Furthermore, we will identify existing effects of economic factors on aggregate demand and supply, and identify fiscal policies that are currently being recommended by government leadership. Utilizing this information, we applied the theory of Keynesian and Classical two well-known economist to evaluate current fiscal policies. Unemployment is defined as people who are jobless, actively seeking work, and available to take a job. The official unemployment rate for the nation is the number of unemployed as a percentage of the labor force. The Bureau of Labor Statistics (BLS) or the U.S. Department of Labor maintains detailed information on particular segments of the population and labor force. In September, the unemployment rate declined by 0.2 percent. The number of un-employed persons decreased by 329,000 to 9.3 million, employment increased by 248,000 in September, and the unemployment rate declined to 5.9 percent. We all agree expectations are higher now than ever before. However, with the current state of unemployment, high household debt, and a flat Gross Domestic Product (GDP), the economy is flirting with another recession. Despite government mandated policies the economy has stalled and will remain here for at least two more years. The economy must continue to balance trade of imports and exports globally to maximize growth. More emphasis must be placed on exporting of U.S. goods which would create more jobs and foster growth. If the U.S. wants to remain the “Superpower” of the world, then we must take the steps necessary now to be better at entrepreneurship, innovative, and competitiveness. This is only obtained by providing high-quality goods and services at a reasonable price. Consumer Income is arguably the most important factor here. More and more Americans are holding on to their hard-earned money despite slim increases in earnings. Since 2011 medium household income has risen 3.8% with the average household earning $51,000. However, that does not change spending habits particularly during the months of September through December. Consumers reduce spending due to higher spending in August/September for summer vacation, clothing for school, school supplies, and college tuitions. Then three months later Christmas approaches leading to discretionary spending. With consumer spending a major driver of the U.S. economy, changes in average spending can reflect how the economy is doing. Currently, Americans are spending more today than they did in 2008. So, we agree that current consumer income is slowly rising and consumers are not making major purchases and controlling spending due to an unstable economy. To have an understanding of the current state of Interest Rates, one must look at who sets the current American interest rate. The central bank of the United States is the Federal Reserve System (FED) or the Federal Reserve, even though the Federal Reserve is an independent government institution it is owned by a number of large banks. The Board of Governors is the governing body of the Federal Reserve; the Board of Governors has seven members who are appointed by the President of the United States. There are twelve regional Reserve banks that have five representatives; who along with the other seven make up the Federal Open Market Committee. The responsibility of the Federal Open Market Committee is to supervise open market operations through monetary policy; while the Federal Reserve has various responsibilities including safeguarding the stability of the United States’ financial system, preventing or limiting...
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