United States Economy since November 2004 to November 2007 Essay
The differentiation of the United States as the lone staying ace power in the universe may non merely use in their military force but in their economic might every bit good. But historically. harmonizing Bernard Baumohl. it was merely during the early seventiess that the U. S economic system was unfastened to international market following the prostration of the Bretton Woods Agreement. which was intended to set up a stable foreign exchange system. As a consequence. Baumohl said “currency values in the universe fiscal market began to drift freely. sometimes traveling wildly up and down” ( p. 240 ) .
The immediate impact of this is that the universe trade grew faster than of all time. Baumohl point out that this development resulted to the inflow of cheaper foreign goods which were frequently of better quality and “increasingly found their manner into the U. S market and started to present serious competition for US producers” ( p. 240 ) . As this was the instance. American companies responded by runing more expeditiously. and lower their monetary values while besides seeking new market overseas. Baumohl noted that since so. trade has evolved to go one of the most of import forces determining the US economy” ( P.
240 ) . the United States economic system soared so high that in the short span of clip they became one of the most if non the wealthiest economic system in the universe. Price stableness in the United States As the US economic system soar high in the international sphere and the buying power of the US dollar remains strong against the euro. the US has maintained a stable monetary value. The OECD economic mentality noted that rising prices in the US has remained with in a desirable scope through the aid of the long-run family study steps. Inflation. the OECD noted “have remained good anchored. even if indexed-bond have drifted somewhat” ( p. 24 ) .
The article point out that this stableness has helped “limit the second-round effects from the oil monetary value and exchange rate dazes. but it is all the more of import that farther policy action validate the still calm expectation” ( p. 24 ) In the OECD Economic Surveys United States 2004 article. it noted that in monetary value stableness. steadfastly anchored long term rising prices outlooks are particularly of import. non merely to keep public assurance in the lastingness of low rising prices achieved over the past two decennaries. but besides to restrict the hazard of a potentially self- reenforcing deflationary spiral in the face of conjectural negative daze ( P.
46 ) . Unemployment. Nazimudeen Saleem stated that unemployment in the US soared to a record high in 2004 at 5. 6 % stretch over the threshold of 5 % . An internet article from entitled Unemployment noted that in April 2007 unemployed grownup work forces stands at 4. 0 per centum while big adult females. at 3. 8 per centum. Caucasians. 3. 9 ; Hispanic ( all races. at 5. 4 per centum ; African American. 8. 2 per centum. and adolescents with the highest figure of unemployed at 15. 3 per centum. Amadeo noted that the weakest year-by-year employment was 1. 2 % in 2004 bespeaking a tendency of diminution since 2006.
She point out that unemployment is non declining at all. but it indicate worsening tendency as unemployment was up at 4. 7 % from 4. 4 % in October and merely somewhat up by one per centum in May 2007 at 4. 5 per centum. Indeed there is a tendency of little diminution in the unemployment rate from 2004 to 2007. Healthy Economic Growth In the study to congress on International Economic and Exchange rate policies in December 2006. it cited that the United States has made significant advancement in cut downing the federal financial shortage from 3. 6 per centum of gross Domestic Product in 2004 to 1.
9 per centum in financial twelvemonth 2006 Gross Domestic Product. posting an betterment of 1. 7 per centum. The study besides cited that the United States economic system has experienced uninterrupted healthy economic growing in 2005 up to the 3rd one-fourth of 2006. but during the last one-fourth economic growing slowed down up to the most recent one-fourth. From the first one-fourth of 2004. Gross domestic merchandise or GDP stands at 3. 9 % and somewhat up by one per centum during the 2nd one-fourth of the same twelvemonth at four per centum. But it slowed down during the 3rd and 4th one-fourth registering merely 3.
1 % and 2. 6 per centum severally. However during the first one-fourth of 2005 GDP was up once more leaping to 3. 4 % but down by 1 % at 3. 3 % on the following one-fourth. The 3rd one-fourth of 2005 posted a highest growing rate since the first one-fourth of 2004. at 4. 2 but drastically fell to 1. 8 per centum during the last one-fourth. Harmonizing to the study of the U. S. Economic Recovery and revival as of March 2007. economic analysis of the GDP for the last one-fourth of 2006 indicates that growing rate has accelerated from 2. 0 per centum on an one-year footing to 2.
5 per centum. The study farther cited that although there were troubles in GDP during the first. 2nd. and 3rd one-fourth of 2006 but the economic system still registered a growing rate of 3. 4 per centum. which is still in line with the existent growing rates in past few old ages. Harmonizing to an article entitled United States Economy 2007. GDP growing rate was under girded by the important additions in labour productiveness that despite of the harm caused by hurricane Katrina it had caused merely a minor impact on overall GDP. which stand in 2005.
Even the surging oil monetary value in 2005 to 2006 had merely limited impact though it threatened rising prices and unemployment. The Buying Power Parity GDP in2006 stands at $ 12. 98 trillion while official exchange rate GDP is $ 13. 22 trillion. Per Capita GDP $ 43. 500. The graph at the bottom page of this paper shows the economic public presentation of the United States economic system refering to the treatment above ( see Figure 1 ) . Healthy Balance of Payment ( Export/ Import ) Francisco Carrada-Bravo pointed out that the best manner to larn about the country’s balance of payments statistics is to “take a careful expression at them for a peculiar period” ( P.
110 ) . Bravo noted that the balance of payments of the United States. and other balance of payments from any state in the universe. encompasses several chief accounts…” ( p. 110 ) . Bravo explained that the value of current history is determined. at big extent by the consequence of trade. service. and transportation of sub histories. Bravo farther explained that “the United States shows a current history excess. when the sale of US goods and services to the remainder of the universe exceeds the US acquisition of these points from other states.
How of all time. the United States has a shortage in the capital history when US corporations invest abroad in surplus of what foreign multinationals invest in the United States. Translating the above account to the US balanced payment. Export publicity. which is managed by the Ministry of Finance. provides subsidies in signifiers of involvement rate support. direct fiscal support. and export wagess and fillips. In a study made by OECD staff. the entire figure of houses of exporting goods was 238. 284.
Out of the entire figure of houses. 97 % per centum of that is SME or small-medium endeavor ( p. 365 ) . The success of this export sector is through the aid of authorities since it has aid plans and abroad trade offices to assist them their little concern with “market research and local aid ( p. 365 ) . Another factor for steady rise of the economic system is a policy issued on November 19. 2004. which “blocked province and local authoritiess from taxing connexions that link consumers to the cyberspace for the following three old ages ( OECD. P.
367 ) . This is because the Federal authorities believed that e-commerce is “a growing engine for exports and international enlargement. Figure 2 of this paper ( see bottom page ) explains the balance of payment. which includes inside informations on American economic system that includes the twelvemonth 2004. 2005. and 2006. Main Macro economic Policies by the United States John Atlee in his executive sum-up of the Macro Economic Agenda Recovery Now and Democratic Comeback 2004 outlined macro economic policies that the US authorities used during the last three old ages.
First is the Analytic Policy Focus. which features an Adopt a growing tendency criterion of mention for economic policy and analysis. This policy besides denies economic recession alternatively suggest that the state is merely sing a mild recession. Significant recovery is yet to get down and keeping structurally balanced growing with unemployment below 4 % should be the purpose of this policy with mention fro the Full Employment and Balanced Growth Act of 1978. Another macro economic policy. which the United States authorities employed during the last three old ages. is the Budget and Management.
John Atlee noted that Bush economic policy is rather weak in its budget. and that this budget exposure must be apprehensible to the electors every bit good as to the investors who are demanding transparence in authorities. This policy besides instructs that shortage projections and budget should non be based on of all time altering and undependable economic prognosis. Furthermore it besides to maintain shortage near to nothing. and extinguish economic prognosiss. which is undependable and of all time altering.
The authorities besides used Social Security policy doing it financially sound to efficaciously discredit the denationalization run as this denationalization mover promulgates falsities possibly. against the capacity of the authorities. Taking Social Security ( SS ) can assist finance non-SS shortages. Monetary Policy is one of the cardinal macro economic policies of the authorities as this is where everything can be fluid. This policy is to acknowledge the creative activity of checkable-deposit money by bank. which finances GDP growing through 18 to one pecuniary multiplier consequence.
The policy besides aims to eliminate the pretence of involvement rate control by increasing modesty demands and direct control to the Fed. The authorities besides used the Systematic Coordination of Monetary and Fiscal Policy over the last three old ages. Atlee reports that Fiscal policy is separate from budget direction as it is chiefly concerned with the over all consequence on the economic system of the budget. In Atlee’s executive sum-up of these macro economic policies. he pointed out that the chief engine of recovery is the Reformed pecuniary policy. which is facilitated by flexible financial policy.
Tax Policy is another really of import step that the Bush authorities had utilized to promote new concerns in the signifier of entrepreneurial inducements to new high tech industries and little concerns. This inducement is an freedom from the undistributed net income revenue enhancement and some steps to avoid unsustainable and inordinate stock monetary value additions. These policies aim to prolong the impulse of economic growing experienced by the state since 2004 to 2007. Demand Policy and Supply Side Policy
Demand policy is a authorities policy based on the appendage of the demand of a certain sector of the authorities or society such as the labour sector or the energy sector. Demand policies in the labour sector is increasing the figure of quality occupations Mark Rank noted that this policy attack “has assumed that the labour market by itself will bring forth plenty occupations to run into the demands of those seeking work—that. as the supply of labour additions. the labour market will in bend respond by bring forthing more occupations to run into the demand” ( p 204 ) .
Therefore. Rank suggested assorted labour demand policies are needed in order to bring forth a more “robust rate of occupation growth” ( p. 204 ) Egbert Tellegen and Maarten Wolsink pointed out that supply-side policy and demand side direction “require widely different abilities from the organization” ( p. 184 ) They contend that the chief challenge of supply-side direction is “to develop and manage installations of the highest proficient quality at the lowest possible costs in order to carry through customers’ demands under all circumstances” ( P.
184 ) . Conclusion/Summary American economic system since November 2004 to November 2007 despite of ups and downs in the economic public presentation. yet it remained a steadily turning economic system. The 2004 saw its drastic economic diminution but it was able to bounce during the first one-fourth of 2005 to the 3rd one-fourth of 2006 ; registering at steady GDP growing rate of three to four per centum. Unemployment was besides worsening as more occupations chance is created each twelvemonth.
In general. the United States economic system are executing strong up to the recent one-fourth of 2007 despite of their current internal debt of about 1. 3 trillion and approximately 10 billion dollars in external debt. They remained economically powerful despite the current depreciation of the dollar against Euro and other foreign currencies. Furthermore. US economic system has buying power of approximately 12. 98 trillion while official exchange rate GDP is $ 13. 22 trillion. Per Capita GDP $ 43. 500. which continuously grows in the preceding twelvemonth.