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Running Head: ECONOMIC ANALYSIS

Economic analysis of a current article about an economic model

ECONOMIC ANALYSIS

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ECONOMIC ANALYSIS
Economic Overview of the United States

Introduction

Mainly due to the restraint of the consumer spending that followed the enormous

improvement in the prior quarter and partly due to reflection of remaining seasonality, the

economic state of the United States seems to have gained some strength in the last quarter of

the year (Beaumont, 2018). As it is characterized by increment of growth of wages and

concrete increase in employment opportunities, nevertheless, the fundamental economy

image remains encouraging.

The U.S Economic Overview

The economy of the United States is still the hugest and the most important in the

whole world irrespective of the drastic global landscape transformations (Harrison, 2018).

The U.S economy is still bigger than the Chinese economy. It represents about twenty percent

of global economy total output. Moreover, it has the largest per capita GDP internationally

according to the IMF. The economy is highly digitalized with advanced technologies and

well-designed service industry which represent about 8% of its national income. Its economy

is characterized by firms which are service oriented in the fields of technologies, money and

financial service, healthcare services and retail services (Beaumont, 2018). The big firms and

businesses in the U.S play a vital role at the international level.

The economy of the United States maintains the status of its source of power through

a bringing together various features. The United States has right of entry to sophisticated

physical infrastructure as well as plentiful natural resources (Beaumont, 2018). The state also

has productive, huge, and well-experienced labor personnel. In addition, the human and

physical capital is completely leveraged in a business-oriented environments and free

unique economic environment. The government offers the regulatory structure, the political

stability, and a functional legal system which allow the economy to thrive and flourish. The

general demography that includes immigrants' diversity brings a sense of risk-taking and

entrepreneurship, as well as a solid work ethics to the mix (Fox and Erickson, 2018). The

economic growth in the U.S is regularly being accelerated by the capital investments, the

ongoing research, and development, as well as invention and innovation through its advanced

technology.

The economy of United States is currently getting out from the period of considerable

recession (Harrison, 2018). A mix of aspects that includes lax government regulations, high

consumer indebtedness, excessive risk-taking in the financial sector, widespread mortgage

lending, and low-interest rates, resulted in a major recession which started in 2008. Several

major banks, as well as the housing market, collapsed. Until a third of quarter of 2009, the

economy of the United States proceeded to contract in what were the longest and the deepest

downturn after the "Great Depression". The government of the United States intervened by

spending 700 billion U.S dollars to buy the assets of the troubled mortgage. In order to

stabilize the financial system, the government of the United States propped up large

floundering companies and organizations (Ramey and Zubairy, 2018). The government also

launched a stimulus package worth 831 billion U.S dollars to use for the next ten years to

improve and boost the economy.

The economy of the United States has been on a slow and uneven recovery since the

recession depths in 2009. Through expansionary monetary policies enacted by the

government through the central bank, the economy has received further support (Ramey and

Zubairy, 2018). The expansionary monetary policies include holding interests rates the lower

levels, as well as the unconventional government practices purchasing large financial assets,
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amounts to hold down long-term rates of interest and increase the supply of money that is

practice commonly known as "quantitative easing".

There is still widespread debate with regard to the health of the economy of the

United States even though the employment has returned to pre-crisis levels, and the labor

market has significantly recovered (Harrison, 2018). Additionally, the economy of the

United States still faces various crucial difficulties and challenges of moving forward, even

though the worst effects of the recession are now fading away. Deterioration of

infrastructure, government budget deficits, large current accounts, elevated pension and

medical costs, rising income inequality, as well as wage stagnation are all issues facing the

economy of the United States.

Trade structure

The United States plays an important role in the global trade systems.

The initial deal of NAFTA includes a chapter on the resolution of conflicts which

allows for the representative's panel to decide whether anti-dumping or countervailing taxes

have been levied unjustly by one the nation in the agreement (Harrison, 2018). The provision

was significant demand in the original negotiations of the treaty and has remained Ottawa's

priority since it has enabled its lumber sector to challenge the levies imposed by the United

States in the past. However, the administration of Trump contests that these panels infringe

the sovereignty of the United States and is an intention on piecing them.

The initial TPP promotes economic growth and exports. This need to establish more

job opportunities as well as success for the twelve nations involved. By 2025, it shall grow

exports by $ 305 every year. The exports of the United States would be about $ 123.5 billion.

It will also benefit the agriculture, plastics, auto, and machinery industries and sectors. The

original TPP increases exports by doing away 18,000 levies put on the exports of the United
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States to the other nations (Harrison, 2018). The U.S has already withdrawn eighty percent of

these duties on the imports. The pact increases a year incomes of employees to $ 223 in all

the nations, with $ 77 billion going to the United States employees. All countries agreed to

reduce the trafficking of wildlife. That helps marine species, elephants, and rhinoceroses the

most. States which do not adhere shall face trade punishments as well as penalties.

Exports from the United States

Even though in the recent decade the U.S has lost some of its competitive advantages,

its materials good still represent two-thirds of its total exports. The U.S majorly exports

manufactured products as well as high-value capital goods such as chemicals, motor vehicle,

airplanes, and industrial machinery (Ramey and Zubairy, 2018). The United States exported

goods was valued 1.510 trillion U.S dollars in 2015. The U.S is the leading exporter of

services worldwide. The services include professional as well as financial business services

and other knowledge-intensive services. Tourism, travel, and transportation are also other

major services exported by the United States. Services represent about 33% of the U.S total

exports.

Imports to the United States

More four-fifth of the total imports to the U.S from overseas is goods (Fox and

Erickson, 2018). About 15% of the imports brought to the United States are petroleum

products, crude oil, and fuel oil. Equipment, industrial machinery, and supplies represent

roughly another fifteen percent of the imported commodities. About twenty-five percent of

the imported items are capital goods such as telecommunication equipment, medical

equipment, electronics, computer accessories, and computers (Harrison, 2018). Consumer

goods such as footwear, television, apparel, textile, household equipment, toys,

pharmaceuticals, and cellphones represent another 25% of imported items in the United
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States (Beaumont, 2018). Services represent about 20% of total imports, automotive

vehicles, parts, and engines represent an additional 15% while 5% of imported goods in the

U.S are food and beverages.

U.S economic and Supply-side Policy

The U.S Economic policy like Federal Reserves has dealt with the economy

weaknesses with the traditional models and unconventional policies (Harrison, 2018). The

U.S Congress has created goals of monetary policies known as “dual mandate” that promote

maximum employment opportunities and stability of prices. The Committees of the Federal

Open Market have established expansionary monetary policies to foster the growth of the

economy. Through its Central Bank, the state government has intruded in the foreign markets

by offering foreign dollar currency. The Bank of America introduced the well-managed

interventions into the currency markets to intentionally weaken the foreign currencies. With

the intention to generally to affect the exchange rates and policy of trade, the central bank of

America interfered with the monetary policy operation to offer foreign currencies for its local

currency (Ramey and Zubairy, 2018). To promote its exports, the U.S has deliberately

cheapened its currency. The actual fact is to import inflations via higher prices of imports.

References

Beaumont, P. M. (2018). ECESIS: an interregional economic-demographic model of the

United States. Routledge.

Fox, M. J. V., & Erickson, J. D. (2018). Genuine Economic Progress in the United States: A

Fifty-State Study and Comparative Assessment. Ecological Economics, 147, 29-35.

discourage true partnership with the United States and Canada?.Routledge.

Ramey, V. A., & Zubairy, S. (2018). Government spending multipliers in good times and in

bad: evidence from US historical data. Journal of Political Economy, 126(2), 000-000.

United States Economy - GDP, Inflation, CPI and Interest Rate

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