The State of Our Economy

The State of Our Economy

The economy of the United States is huge. It has an influence on every country in the world. When we are doing well, the world does well, when were hurting every one feels it. But how do we know it's doing well? We have measures for that. I will be focusing on three to help me determine the state of our economy.

First is unemployment. This is an important part because it tells us how many people have jobs. The higher it is the worse off we are, that means there aren't many jobs for people to work. And if people aren't working, the GDP will rise and if that raises too fast it will cause inflation. And that bad, because people wont have money to buy stuff with and we will experience a depression. As of February, the unemployment rate was 10.4%, according to the U.S. Bureau of Labor Statistics, down from 10.6%. Basically every one out of ten people are with out jobs. I think it's ok where it's at, but it should go down more before it thinks about going up. No one likes to be out of work, but it's not possible to employ every single person. This is telling me that our economy is in the middle of the road thinking about where it wants to go.

Another indicator is the federal funds rate. This is the rate which banks charge other banks for loans. Its also used to control the money supply to combat inflation and deflation. If the Fed predicts inflation they will reduce the rate thus increasing the money supply and dropping prices. If they detect deflation, they will do the opposite. They will increase the rate, reducing the money supply and raising prices. Since 2006 the rate has been dropping. So the feds have been predicting inflation so they increased the money supply. Inflation isn't good, as I said before. This leads me to believe we are hurting just a bit. Not enough to cause wide spread panic, but enough to raise an eye brow and keep watch on things.

Lastly is gross domestic product, or GDP. This is one of, if not, the biggest indicators of our economy. GDP is a basic measure of a countries total economic output. The higher the number the better, its also good if the year is better than last. Our GDP is up from 2008, from 14.3 billion to 14.4 billion. It has also increased the last four quarters, which people look at as a really good thing. This tells me were doing just fine.

Taking all three of these indicators into account, this leads me to believe that we are doing well. Unemployment is down, the fed rate is down and GDP is up. We should still keep an eye on these indicators so they can lead us and give us hints as to what's next for the US.