The following shows the economic data for the United States for the last ten years, as well as the projected values for the year 2016. Some of the data are projections that are based on available information, considering that some of the statistics for the year 2015 have not yet been analyzed. The data are then followed by a detailed discussion.
The US economy has been rising over years and this is expected to continue even in the year 2016. Various economists have argued that the US economy remains on the bull trend, regardless of the fact that the stock market may not reflect this. From another perspective, it is argued that the GDP growth will be short-lived considering that the GDP has been influenced by rising stocks which are not fast moving. As a result, the economy may not grow at a fast rate considering that the stock will accumulate in stores. Additionally, China economy is projected to grow at a slower rate and US will have to export less to China. This will influence the production and investment in the US, hence the growth in the economy.
Inflation is a factor that greatly affects the lives of the citizens in the US. The Federal Reserve and other responsible government agents work to ensure that inflation remains at a significant level. Looking at the statistics, the interest rates have been reducing for the last 10 years, from the year 2005 when the inflation was 3.4% to the rate 0.2% in the year 2015. The projections for this year are that inflation will rise to 2%, which is healthy for the economy. During last year, the decline in inflation to a great level was facilitated by the fact that the oil prices (energy costs) declined to a great level. The price of manufactured products also reduced and the people in US enjoyed the reduce price for various products. However, the US government is keen to ensure that there is no deflation, which would adversely affect its economic growth. Recently, the Federal Reserve has taken measures to ensure that there is no deflation, and this includes the rise of lending rates. The increase in interest rates will have the effects of increasing the inflation in the economy.
The Keynesian theory argues that unemployment and inflation have an inverse relationship. As inflation rises, unemployment reduces. The US economy is set to realize greater level of employment and this will on the other hand increase inflation. The increased interest rate is a cost to the production and this will have an impact on the prices in the economy. Cost push inflation theory explains that the rise in cost of production fuels inflation. The government is also likely to change the tax rates so as to achieve the desired level of inflation, and this will also add up to the costs of production hence increase inflation rates. It is hence projected that the rate of inflation in the US will rise to 2% in the year 2016.
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