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| Words: 950 | Submitted: 11-Apr-2011
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Description2011 Economic Analysis
The United States economy is currently in the process of recovering from one of the worst downturns since the Great Depression. The downturn was triggered by a large decline in house prices and a financial crisis. Unemployment rates have skyrocketed and the pace of growth in the nationís output has been lethargic. The United States is facing a daunting task as we have struggled to recover from the recent recession.
The Federal deficit reached an all time high in 2009 of $1.42 trillion, but decreased to $1.29 trillion in 2010. These are the highest number we have seen since the 1940ís and World War II when the government was engaging in a massive war effort. A huge deficit carried by the government typically results in increased interest rates. However, the Federal Reserve has kept short term interest rates low and weary investors have been able to offset their uncertainty with treasury bonds. The deficit we are facing can be easily tied into the state of the economy. The United States government has used government spending for relief programs and increased payments to unemployment benefits due to the increased unemployment rates. However, larger concerns continue to loom around the United States economy even after the recession ends. The big three entitlement programs offered by the federal government, Medicare, Medicaid, and Social Security are predicted to grow at a much more rapid pace than the economy. The big three entitlement programs will create long term problems that will need to be addressed sooner rather than later.
The recent actions taken by U.S. policymakers should facilitate further growth in real GDP in 2011; economists believe production and employment will stay well below the economies potential for several years. The Congressional Budget Office expects that economic growth will remain moderate for the next two years. Real GDP is expected to increase by 3.2 percent this year and 2.8 percent next year. The CBO expects to see continued growth in small business investment, developments in both residual investment and net exports, and a reasonable increase in consumer spending as people begin to have more faith in the future of the economy. The government has delayed an increase in taxes that would have occurred this year by the Job Creation Act of 2010. The Job Creation Act of 2010 will provide a short-term improvement to the economy by reducing taxes, extending unemployment benefits, and delaying an increase in taxes.
Moderate growth in output in the past year and mismatches between the requirements of available jobs and the skills of job seekers have been the cause of the sluggish ...
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