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Economics Essay Examples

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Published on: Jun 6, 2023

Last updated on: Jan 31, 2024

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What is an Economics Essay?

An economics essay is a written piece that explores economic theories, concepts, and their real-world applications. It involves analyzing economic issues, presenting arguments, and providing evidence to support ideas. 

The goal of an economics essay is to demonstrate an understanding of economic principles and the ability to critically evaluate economic topics.

Why Write an Economics Essay?

Writing an economics essay serves multiple purposes:

• Demonstrate Understanding: Showcasing your comprehension of economic concepts and their practical applications.
• Develop Critical Thinking: Cultivating analytical skills to evaluate economic issues from different perspectives.
• Apply Theory to Real-World Contexts: Bridging the gap between economic theory and real-life scenarios.
• Enhance Research and Analysis Skills: Improving abilities to gather and interpret economic data.
• Prepare for Academic and Professional Pursuits: Building a foundation for success in future economics-related endeavors.

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If you’re wondering, ‘how do I write an economics essay?’, consulting an example essay might be a good option for you. Here are some economics essay examples:

Short Essay About Economics

A Level Economics Essay Examples

Here is an essay on economics a level structure:

Band 6 Economics Essay Examples

Here are some downloadable economics essays:

Economics essay pdf

Economics essay introduction

Economics Extended Essay Examples

In an economics extended essay, students have the opportunity to delve into a specific economic topic of interest. They are required to conduct an in-depth analysis of this topic and compile a lengthy essay. 

Here are some potential economics extended essay question examples:

• How does foreign direct investment impact economic growth in developing countries?
• What are the factors influencing consumer behavior and their effects on market demand for sustainable products?
• To what extent does government intervention in the form of minimum wage policies affect employment levels and income inequality?
• What are the economic consequences of implementing a carbon tax to combat climate change?
• How does globalization influence income distribution and the wage gap in developed economies?

IB Economics Extended Essay Examples 

IB Economics Extended Essay Examples

Economics Extended Essay Topic Examples

Extended Essay Research Question Examples Economics

Tips for Writing an Economics Essay

Writing an economics essay requires specific expertise and skills. So, it's important to have some tips up your sleeve to make sure your essay is of high quality:

• Start with a Clear Thesis Statement: It defines your essay's focus and argument. This statement should be concise, to the point, and present the crux of your essay.
• Conduct Research and Gather Data: Collect facts and figures from reliable sources such as academic journals, government reports, and reputable news outlets. Use this data to support your arguments and analysis and compile a literature review.
• Use Economic Theories and Models: These help you to support your arguments and provide a framework for your analysis. Make sure to clearly explain these theories and models so that the reader can follow your reasoning.
• Analyze the Micro and Macro Aspects: Consider all angles of the topic. This means examining how the issue affects individuals, businesses, and the economy as a whole.
• Use Real-World Examples: Practical examples and case studies help to illustrate your points. This can make your arguments more relatable and understandable.
• Consider the Policy Implications: Take into account the impacts of your analysis. What are the potential solutions to the problem you're examining? How might different policies affect the outcomes you're discussing?
• Use Graphs and Charts: These help to illustrate your data and analysis. These visual aids can help make your arguments more compelling and easier to understand.
• Proofread and Edit: Make sure to proofread your essay carefully for grammar and spelling errors. In economics, precision and accuracy are essential, so errors can undermine the credibility of your analysis.

These tips can help make your essay writing journey a breeze. Tailor them to your topic to make sure you end with a well-researched and accurate economics essay.

To wrap it up , writing an economics essay requires a combination of solid research, analytical thinking, and effective communication. 

You can craft a compelling piece of work by taking our examples as a guide and following the tips.

However, if you are still questioning "how do I write an economics essay?", it's time to get professional help from the best essay writing service -  CollegeEssay.org.

Our economics essay writing service is always ready to help students like you. Our experienced economics essay writers are dedicated to delivering high-quality, custom-written essays that are 100% plagiarism free.

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Barbara P (Literature)

Barbara is a highly educated and qualified author with a Ph.D. in public health from an Ivy League university. She has spent a significant amount of time working in the medical field, conducting a thorough study on a variety of health issues. Her work has been published in several major publications.

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Macro Economic Essays

These are a collection of essays written for my economic blogs.

Exchange Rate Essays

• Effects of a falling Dollar
• Why Dollar keeps falling
• Discuss Policies to Stop the Dollar Falling
• Does Devaluation Cause Inflation?
• Benefits and Costs of Falling Dollar
• Reasons for Falling Dollar
• The Dollar as the World’s Reserve Currency

Economic Growth Essays

• Evaluate Benefits of Economic Growth
• Essays on Recessions
• Causes of Recessions
• Problems of Recovering from a Recession
• What can Increase Long-Run Economic Growth?
• Discuss Effect of a fall in the Savings Ratio

Inflation Essays

• Discuss the Difficulties of Controlling Inflation
• Should the aim of the Government be to Attain Low Inflation?
• Explain What Can Cause a Sustained Increase in the Rate of Inflation
• Reasons for low inflation in the UK
• Inflation Explained
• Difficulties of Inflation targeting
• Hyperinflation

Unemployment Essays

• Explain what is meant by Natural Rate of Unemployment?
• Should the Main Macro Economic Aim of the Government be Full Employment?
• The True Level of Unemployment in the UK
• What explains low inflation and low unemployment in the UK?

Demand Side Policies

• Discuss effect of Expansionary demand-side policies on Balance of Payments and Environment
• Effects of a Falling Stock Market
• How do Mortgage Defaults affect and Economy?
• Discuss the effect of increased Government spending on education
• Phillips Curve – Trade-off between Inflation and Unemployment

Development Economics

• Why Growth may not benefit developing countries
• Does Aid Increase Economic Welfare?
• Problems of Free Trade for Developing Economies

Fiscal Policy

• Will US Economy benefit from Tax Cuts?
• Can Fiscal Policy solve Unemployment?
• Explain Reasons for UK Current Account Deficit
• Benefits of Globalisation for Developing and Developed Countries

Monetary Policy

• Discuss Effects of an Increase in Interest Rates
• How MPC set Interest Rates
• Benefits of High-Interest Rates (and recessions)
• Who Sets interest rates – Markets or Bank of England?

Economic History

• Economics of the 1920s
• What Caused Wall Street Crash of 1929?
• UK economy under Mrs Thatcher
• Economy of the 1970s
• Lawson Boom of the 1980s
• UK recession of 1991
• The great recession 2008-13

General Economic Essays

• The Dismal Science
• Difference Between Economists and Non Economists
• War and Recessions
• The Economics of Fear
• The Economics of Happiness
• Can UK and US avoid Recession?
• 3 Of the Worst Economic Policies
• Overvalued Housing Markets
• What Went Wrong with US Economy?
• Problem with Bailing out financial sector
• Problems of Personal Debt
• Problem of Inflation
• National Debt in the UK
• How To Survive a Recession
• Can A recession be a good thing?

Chinese Economy

• Problems of Chinese Economic Growth
• Should we worry about a strong China
• Chinese Growth and Costs of Growth
• Chinese Interest Rates and Economic Growth

Model essays

• A2 model essays
• AS model essays
• Top 10 Reasons For Studying Economics
• Inflation explained by Victor Borge
• Funny Exam Answers
• Humorous look at Subprime crisis

US Economy Essays

The implications of tax cuts on the us economy, the economies of the usa and china, nature of high inflation rate, popular essay topics.

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• Political Science

The United States Economy

Updated 13 September 2023

Subject Political Science

Downloads 51

Category Government

United States Economy

Despite encountering various challenges mostly at domestic level, United States economy remains the most important and the largest in the world. The economy of U.S comprises about 20% of the entire global output which makes it larger than that of China (Gilchrist, 2017). Additionally, it features a technologically advanced and a highly developed service sector. The great success associated with this growth in the economy have been contributed by the low inflation rate, low rate of interest, widespread lending and risk-taking in the sector of finance.

Inflation Rate in the U.S

The current rate of inflation in the U.S is 2.2% which is a reflection of the last 12 months which was published on March this year. The inflation rate in the U.S is calculated using the Consumer Price Index (CPI). This consists of prices that citizens or consumers pay for services and products which not only includes various taxes but also producer prices. In January 2018, the rate of inflation was determined to be 0.54% which was 0.60 more as compared to the previous month of 2017. To date, the inflation rate is at 0.54% and the constant inflation rate is 2.07%. This rate of inflation has made United State be ranked 11 in terms of the yearly inflation rate (Bianchi, 2017).

Consumer Price Inflation

Over the past 12 months, consumer price inflation has increased by 1.7%. This measure of inflation excludes energy items and food items. “Measures of long-run inflation expectations have, on balance remained stable despite some measures remaining low by historical standards” (Bianchi, 2017).

Fiscal Policy in the United States

The current state of fiscal policy in the United States has been determined largely by the increase in government transfer as well as the great recession. Due to this, various fiscal measures have been put in place to mitigate or reduce the impact contributed by the previous recession. Currently, markets have strongly responded to the election of Donald Trump which has pushed up for equities, the dollar as well as long-term interest rates. Despite many factors being known to influence asset prices, a much expansionary fiscal policy which is as a result of the new administration is likely to result to lower taxes, higher spending, as well as larger deficits, seem to be an important aspect to the prevailing market moves.

Fiscal Policy Actions and the United States Economy

The state reserves reaction pertaining to predicted fiscal policy seems to be more cautious as compared to those that influence the markets. According to Fed, fiscal policies such as tax reduction and increase in government spending influences the economy in various ways (Bernanke, 2017). For example, the new administration in the United States has attempted to bridge aggregate demand by increasing its expenditure and reduction on tax and interest rate which has helped to reduce the rate of unemployment by creating jobs. According to the chairman of Fed, the economy of U.S is approaching full employment which calls for more fiscal policy actions. However, to ensure that increase in output will not result in inflation, more focus should be on improving aggregate supply and improving productivity.

Projection for U.S Economy in 2018

The United States through the administration of Donald Trump is expected to integrate a new fiscal program which will help to ease the fiscal policy up to 2020 and also enhance world growth. In 2018, my projection for U.S economy in terms of inflation and fiscal policy is that the new administration will continue to increase its expenditure to enhance job creation and to reduce the rate of interest so as to enhance economic growth. Additionally, I predict that the government will increase its investment and consumption, a reform or decrease in corporate taxes and personal income taxes which will be among the fiscal measures to be implemented. The stimulus on U.S fiscal policy is likely to boost and enhance GDP growth by about 0.1% to 3.6% by 2018.

Bianchi, F., " Ilut, C. (2017). Monetary/fiscal policy mix and agents' beliefs. Review of

            Economic Dynamics, 26, 113-139.

Bernanke, B. S. (2017). Federal reserve policy in an international context. IMF Economic

            Review, 65(1), 5-36.

Ciccarelli, M., Garcia, J. A., " Montes-Galdón, C. (2017). Unconventional monetary policy

 and the anchoring of inflation expectations.

Gilchrist, S., Schoenle, R., Sim, J., " Zakrajšek, E. (2017). Inflation dynamics during the

 financial crisis. American Economic Review, 107(3), 785-823.

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The U.S. Economy, Essay Example

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You are free to use it as an inspiration or a source for your own work.

An online article by Lucia Mutikani on Reuters reported that Fed’s easy monetary policy has helped prevent the adverse economic impact that was expected from tighter fiscal policy. Some economists expected Q1 2013 economic growth to be slower due to potentially higher tax rates as well as government spending cuts but the predictions didn’t materialize. The U.S. economy has benefitted from the fact that the interest rates have been near zero since December 2008 and central bank has pumped $2.5 trillion into the economy to improve economic performance and employment rate (Mutikani, 2013).

The experience has shown that monetary policy has exerted greater influence on the economic performance than the fiscal policy. Some economists have admitted that they overestimated the impact of potential government spending cuts on business activities. The negative impact of tighter fiscal policy has also been lower because the U.S. economy is in a better condition than it was few years back (Mutikani, 2013).

Consumers have also been spending more because they have been able to cut down their debt burden and credit access from lending institutions has eased. The Fed data also showed that household debt in Q4 of 2012 grew at the fastest rate since early 2008. This is also a sign that the Fed’s monetary policy has been working since the public is more willing to accumulate debt and spend it (Mutikani, 2013).

This article addresses several topics discussed in chapter 13. One of the topics is taxation which the economists feared would negatively hurt economic growth if raised though their expectations didn’t fully materialize. The chapter also mentions that the individuals and the firms look at their income after-tax when making spending decisions. The chapter also mentions that a rise in government spending which is not accompanied by higher tax revenue, means the government has to borrow which also raises interest rate and discourage borrowing by firms. This may explain why according to the article, interest rates have remained lower. Since the government spending is expected to decline, the government may not need to borrow as much as it would have otherwise, and, thus, it has been relatively easier for the Fed to make sure interest rate remains low.

The chapter also explains that low interest rates mean businesses and individuals have more disposable income and this is exactly what we have learnt in the article that low interest rates and ease of obtaining credit has encouraged businesses and the general public to borrow more. This also helps us understand the rationale behind Fed’s decision to keep interest rates low so that the U.S. economy is able to quickly recover from recession.

The article mentions that economists feared government spending cuts would negatively harm economic growth and their fears were legitimate. As the chapter mentions, government spending during abnormal times helps stimulate economic growth by providing income to the public which is then used on consumption activities. The U.S. Government used this formula during the Great Depression as well. The chapter mentions that fiscal policy can be quite helpful during severe downturn and I remember reading in the news that the U.S. financial crisis would have been much severe were it not for the actions of the U.S. Government.

Mutikani, L. (2013, March 22). Easy Fed softens fiscal policy punch on economy . Retrieved August 25, 2013, from http://www.reuters.com/article/2013/03/22/us-usa-economy-growth-idUSBRE92L03O20130322

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United States Economy

Key economic indicators, economic snapshot, our forecasts, united states economic overview.

The United States has a diverse, highly developed and private-sector-led economy, which is the largest in the world in nominal GDP terms and is characterized by high levels of productivity, technological innovation, and competitiveness. Other key economic strengths include a flexible labor market , relatively solid demographics compared to other rich nations, and the use of the dollar—the world's reserve currency. U.S. economic data is strong: In the decade to 2023, the United States boasted real GDP growth of 2.3%, well above the G7 average of 1.8%. However, the U.S. also has its weaknesses. Income inequality is the highest among its peers, politics and society at large are bitterly polarized, and the fiscal position is weak.

The country boasts many of the world's largest and most successful corporations. The technology sector, centered in places like Silicon Valley, has played a pivotal role in driving innovation and global competitiveness. In recent decades, the United States has seen a shift towards a service-based economy, benefitting from a vast domestic consumer base . Services, such as finance, healthcare, education, and entertainment, now account for a substantial portion of GDP and employment.

International trade is a cornerstone of the U.S. economy, with the nation being both a major importer and exporter of goods and services. That said, trade policy has turned more protectionist in recent years, with the country pulling out of talks to join the CPTPP trade agreement and locked in a trade and technology war with China.

Under President Biden, the country has implemented a more state-led approach to economic management that focuses on boosting domestic manufacturing and ensuring the security of supply chains. Initiatives have included green-energy subsidies and tax breaks, fiscal incentives for semiconductor production, and domestic content requirements for government procurement.

Income inequality, volatile politics and a mounting fiscal burden remain economic drags. Additionally, despite its active role in trade, the U.S. has maintained a trade deficit for several decades. Moreover, climate change, healthcare costs, and the aging population pose long-term economic concerns.

When looking at the United States' economic forecasts, our analysts expect the nation's outperformance relative to other major economies to continue over our forecast horizon. Economic diversification provides stability and resilience, helping the economy weather challenges such as economic downturns and global crises.

The United States' economy in numbers:

Nominal GDP of USD 25,744 billion in 2022.

GDP per capita of USD 77,187 compared to the global average of USD 10,589.

Average real GDP growth of 2.3% over the last decade.

Economic structure:

International trade:, economic growth:, fiscal policy:, unemployment:, monetary policy:, exchange rate:.

55 indicators covered including both annual and quarterly frequencies.

Consensus Forecasts based on a panel of 71 expert analysts.

United States Economic Data

Interested in United States economic reports, analysis and data? FocusEconomics provides data, forecasts and analysis for hundreds of countries and commodities. Request your free sample report now.

The State of the US Economy in 2020 Essay

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Introduction

2020 was a period of instability for the entire global economy due to the COVID-19 pandemic, which brought severe human and financial losses to most countries in the world. The United States was no exception as the virus quickly spread throughout the country and took the lives of thousands of people. The Covid-19 pandemic resulted in an unprecedented economic decline in the first two quarters of 2020 (Fig.1). In general, GDP for the year decreased by 3.5%, which is significantly higher than the 2008 crisis (0.1%) (Bureau of Economic Analysis, 2021). However, government measures and stimuli set the economy on the path to recovery in the second half of 2020, although a full economic recovery has not yet been achieved.

The covid-19 pandemic reached large scales as early as February 2020; however, the impact on the economy was most evident in the second quarter of the year. The President of the United States announced a lockdown in March 2020; hence, the consequences of the two-week closure of the retail trade, the restaurant, and tourism business, and the reduction in production were manifested in a GDP decrease of 5% (Bureau of Economic Analysis, 2020). However, the next three months of continued lockdown resulted in a 31.4% decline in GDP for the US economy (Fig.2). According to the definition of The National Bureau of Economic Research, such a significant decline in economic activity over several months is an economic recession. As can be seen in the table, the lockdown led to a considerable decrease in the gross domestic income, personal income, and personal consumption expenditure price index, since all public places, except for the essential ones, were closed.

Recovery and Growth

Nevertheless, the government measures taken at the time allowed the United States to restore economic growth in the third quarter of 2020 (Fig. 3). Part of the payments aimed to improve medical services, develop vaccines, and provide Americans with medical care. The other part was used to increase the personal income of Americans who were left unemployed or in financial difficulty. The government also provided financial incentives for businesses and lowered the fed funds rate to provide loan opportunities for businesses (Amadeo, 2021). Thus, GDP in the third quarter grew by 33.4% and continued to grow by 4.3% in the fourth quarter (Bureau of Economic Analysis, 2021). However, while growth continues, it takes longer for the US to return to previous levels of economic development.

Reasons for Recession: Pandemic

The covid-19 pandemic came as a surprise to most countries in the world and health systems. Borders have been closed, and public places are prohibited from working to prevent the spread of disease and the collapse of an unprepared health care system in the United States. Consequently, many employers in the tourism, resourcing, and other sectors had to fire their employees due to a lack of profit. This factor was reflected in the personal earnings of the population. The lack of funds due to unemployment and the closure of most public places has led to a decrease in consumer spending and, consequently, companies’ profits. Thus, the US GDP fell due to the bankruptcy of many companies, and a reduction in tax revenues, which caused a recession in the economy.

Reasons for Recession: Unemployment Surge

A more detailed examination of all factors demonstrates the depth of the crisis faced by the United States. The shutdown of many companies resulted in the loss of 20.6 million jobs, which raised the unemployment rate to 14.8% (U.S. Bureau of Labor Statistics, n.d.). Simultaneously, most businesses implemented new security measures or sent employees to work remotely, making it even more challenging to find a job. The industries most affected by restrictions were tourism, restaurants and bars, and places of entertainment. At the same time, although today the unemployment rate has dropped to the normal rate (6%), these areas still face the most significant difficulties in work (U.S. Bureau of Labor Statistics, n.d.).

Unemployment, in turn, has impacted the personal income of many Americans and the purchasing power of the population in general (Fig. 4). The data shows that citizens’ personal income fell 4% in May and remained low over the following months, although government aid helped to reduce this trend (“Personal income,” 2020). In addition, the lockdown also reduced the ability to spend money on a range of services, such as a movie or gym, which, together with low income, decreased consumer waste. Nevertheless, this indicator began to grow rather quickly as consumers became less afraid of a deepening crisis and began to use online commerce more actively.

However, the decline in customers’ spending resulted in a significant decrease in retail sales. People spent much less money on clothing and sports equipment as they spent most of their time at home. The closures of bars and restaurants also led to lower sales, although the provision of delivery helped maintain their activity. At the same time, local brands and small businesses that did not have the funds to organize online sales or were not well-known enough to compete with such platforms as Amazon, eBay, or Uber Food, suffered the most.

The instability of the economy and the ambiguity of the development of the pandemic also affected the US stock market (Fig.5). In fact, stock markets crashed in March 2020 and only managed to recover in November 2020. In March 2020, the fall of the Dow Jones Industrial Average (DJIA) set four records and the DJIA closed at 23,553.22 points (Amadeo, 2021). The Dow Jones Industrial Average (DJIA) is a stock market index that tracks the economic performance of 30 large national companies with stable profit, such as the Walt Disney Company. Therefore, it is a benchmark of the economy, since if the most stable and largest companies lose their profits, this means instability and problems of the national economy.

Reasons for Recovery

Despite the significant negative impact of the lockdown on the US economy, this measure still had a positive effect, which helped restore economic activity in the third quarter of 2020. The lockdown slowed the spread of the virus and gave the healthcare system time to prepare for patient admission and organize preventive measures. For this reason, most states have eased restrictions on how businesses operate, while other parts of the business have shifted their focus to online shopping. At the same time, the government created supportive programs for citizens and businesses to stimulate the economy. Consequently, consumer spending has increased, as have corporate profits.

Support of American Citizens

Support of citizens by the government was essential for the subsequent economic recovery. The Families First Coronavirus Response Act provided Americans with paid sick leaves, free testing, and unemployment benefits. The CARES Act in March 2020 provided $ 293billion in stimulus checks to taxpayers who needed help and expanded unemployment insurance (Amadeo, 2021). In December 2020, Americans in need also received up to $ 600 in new stimulus checks (Amadeo, 2021). This assistance stimulated consumer spending, which helped keep business activities, and also allowed people to receive timely treatment, which reduced the burden on the health care provider and saved labor resources.

Growth of Customers’ Spending

Government incentives and a modest decrease in the rate of spread of the virus have increased Americans’ spending. In addition, some categories of goods such as insurance, household items, food, and beverages for home consumption have grown due to the inaccessibility of public places (Mitterling et al., 2020). Other categories, such as food services, transportation, and recreation, recovered quite quickly as some of the services became available online, while others became available with a partial lifting of restrictions (Fig.6). However, complete restoration of the pre-pandemic level of consumer spending requires time and the removal of all restrictions.

Improvement of Health Care System and Situation

The ban on public places’ work and other restrictions were mainly related to the unpreparedness of the health care system to cope with large numbers of patients. For this reason, the government has made several rounds of investment in equipment, patient admission, testing, and isolation structures to avoid collapse. This preparation has allowed governments to partially lift restrictions, although the threat of the coronavirus remains relevant. Nevertheless, preventive measures and the organization of the treatment procedures allow some public places to work and stimulate business activity.

Stimulation of Business

The state has also encouraged businesses to operate by providing financial assistance to entrepreneurs and companies. Some of the incentives were provided as low or zero interest rate loans. The other part was intended for small businesses as an aid. These incentives have allowed companies to pay rent for premises, retain employees, or change the delivery of goods and services, for example, arrange delivery. Consequently, these incentives made it possible to maintain and restructure the work of small and medium-sized businesses, which in the third and fourth quarters led to an increase in their activity.

The government has taken steps to cut interest rates to make sure banks have enough funds to lend. In March 2020, The Federal Reserve lowered the fed funds rate from 1.0% to 0%, which allowed banks to lend 100% of their deposits (Amadeo, 2021). Consequently, these steps helped companies and individuals to receive money for their spending. In this way, companies were able to use the funds to modernize or maintain their businesses, and users were able to use the money to buy essential goods and items. For example, in Q3 and Q4, spending on houses and furniture remained quite high (Torry, 2021). Thus, the decrease in interest rates contributed to preserving and recovering economic activity in the country.

The shift of Business to E-Commerce

The lockdown and the closure of public spaces have been a strong incentive for businesses to switch to e-commerce and online service delivery. Financial assistance from the state and the possibility of loans, in turn, made this transformation possible. Consequently, a significant proportion of retail, food and entertainment companies have partially or completely switched to e-commerce. This shift is most noticeable in user online shopping rates, which grew by about 30% from March 2020 to January 2021 (Drenik, 2021). Consequently, the availability and development of technology reduced the impact of the lockdown and allowed the economy to start recovering after a relatively short period.

Decrease in Unemployment Rate

The described financial incentives, the partial lifting of restrictions, and the transition of businesses to online sales and services also affected the unemployment rate. These changes allowed companies to call some of their employees from temporary layoffs, as well as restore jobs lost at the beginning of the pandemic. In addition, companies have also transferred some of their employees to remote work or provided a safe working environment for workers to return to their offices. Consequently, by early 2021, the unemployment rate fell to 6% after a peak of 14.8% (Fig. 7). This decline also led to higher personal incomes for Americans and higher spending, which enhanced business activities( Fig. 7). Thus, business activity increases the number of jobs and reduces the unemployment rate, which, in turn, contributes to the operation of the business and the growth of GDP.

Prognosis: Importance of Vaccination

Although mass vaccination of the population against COVID-19 became available only in 2021, it is essential to discuss this factor as a contributor to economic growth. Vaccine availability means accelerating the movement towards economic recovery because it prevents new waves of an increased infection rate. Although the vaccine is not 100% effective, it significantly reduces the risks of coronavirus. Consequently, acquiring herd immunity by the population will allow companies to return to work, increase the number of jobs, and the possibility of spending money on customers. However, this process is quite lengthy due to the size of the US population.

Optimistic Prognosis

Current trends show that the US economy is on the path to recovery, although many indicators have not yet reached pandemic levels. For example, retail and manufacturing levels rose, especially real estate sales, due to low-interest rates (Pickert, 2021). According to the expert’s forecasts, a full economic recovery will be achieved by mid-2021 (Ghosh & Sarkar, 2021). Other positive forecasts include a decline in unemployment to 4.1%, and an increase in household income and customer spending (Cox, 2021). These changes are possible thanks to a new round of incentive checks for 1.9 trillion, as well as vaccinations that reduce the incidence of disease.

Pessimistic Prognosis

There are also pessimistic forecasts, although their probability is rather low. The main weakness and threat is the repeated growth of coronavirus cases, which will neutralize a significant part of the efforts to maintain the economy and increase the budget deficit. The reasons for this situation can be the lifting of restrictions, the ineffectiveness of the vaccine, or the mutation of the virus resistant to the vaccine. However, since most preventive measures are still in place and vaccinations show positive results, this scenario is unlikely. In addition, some experts fear inflation due to significant government spending on stimulating the economy and rapid GDP growth (Cox, 2021). However, the US needs to return to its pre-pandemic level of GDP before taking action to regulate inflation.

Thus, an analysis of the state of the US economy in 2020 shows that the country has gone through a period of recession and recovery in 12 months. The COVID-19 pandemic, which came as a surprise to the global economy and healthcare, has led to the temporary closure of many companies, a decrease in profits and GDP. However, timely government stimulus allowed economic growth to be achieved as early as the third quarter of 2020. The preservation of these incentives simultaneously with the population’s vaccination makes it possible to forecast an increase in GDP in 2021, economic recovery to a pre-pandemic level, and further GDP growth.

Bureau of Economic Analysis. (2020). Gross Domestic Product. Web.

Bureau of Economic Analysis. (2020). Personal Income and Outlays : Web.

Bureau of Economic Analysis. (2021). Gross Domestic Product. Web.

Cox, J. (2021). 10% GDP growth? The U.S. economy is on fire and is about to get stoked even more. CNBC. Web.

Cox, J. (2021). Goldman Sachs forecasts a jobs boom, and says the unemployment rate could fall to 4.1% by the end of 2021. CNBC. Web.

Drenik, G. (2021). 2020 accelerated the future Of e-commerce. What does that mean for 2021? Forbes. Web.

Mitterling T., Tomass, N., & Wu, K. (2020). The decline and recovery of consumer spending in the US. Brookings. Web.

Pickert, R. (2021). U.S. economy surges into 2021 as sales, output top forecasts. Bloomberg. Web.

Sarkar, S. S., & Ghosh, I. (2021). U.S. economy on a solid footing, coronavirus still top threat: Reuters poll. Reuters. Web.

Torry, H. (2021). U.S. economy shrank in 2020 despite fourth-quarter growth. The Wall Street Journal. Web.

U.S. Bureau of Labor Statistics. (n.d.). Web.

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Is the US economy growing or declining? Are prices increasing? Are people finding jobs?

Table of Contents

What is the current state of the us economy.

What is the unemployment rate?

Unemployment rate

Is the cost of living rising?

Inflation rate

Is the US economy growing or declining?

Economic growth

What is the role of the government in the economy?

Spending on the economy

Agencies and elected officials.

More on the economy from USAFacts

Explore economy data trends

There are many ways to measure the American economy: analyzing US gross domestic product (GDP) over time, recent jobs and employment reports, investments in small businesses, wealth distribution, price inflation, and more. This page provides some of these measures to answer fundamental economic questions and shows how data helps develop an understanding of how the economy is changing.

In December 2023 , the unemployment rate was 3.7% .

The unemployment rate has stayed under 4% since january 2022..

Published by the Bureau of Labor Statistics (BLS), the official unemployment rate is the number of active job seekers divided by the labor force. The BLS defines active job seekers as people who are not working and have submitted a job application at least once in the past four weeks. Anyone who has a job at the time of the survey, even if it is part-time, seasonal, or temporary, is considered employed and is not included in the unemployment rate.

Although the unemployment rate is often reported at the national level, it is not uniform when breaking it down by location. State unemployment rates are usually published two weeks after the national unemployment rate is announced.

In December 2023, prices were 3.4% higher compared to the same month the previous year.

The inflation rate has been lower than 4% since june 2023..

There are many ways of measuring inflation , but one of the most common measures is the Consumer Price Index for Urban Consumers (CPI-U), which is produced by the Bureau of Labor Statistics. The CPI-U is an index-value of the price paid by urban consumers for a “representative basket of goods and services” or the most common goods and services Americans buy in an average month. The agency surveys 24,000 people every three months about their spending habits, classifying spending in more than 200 categories.

Price inflation is the percent increase in this index, year-over-year. (If the percentage is negative, it is called price deflation) In other words, it shows how much prices have changed compared to the same month in the previous year, as a percentage.

Although prices may be growing or shrinking on average, changes may not be uniform when breaking it down by spending categories. This means that everybody experiences inflation differently . Since food and energy categories are typically much more volatile than the other parts of the CPI, economists often focus more on a metric called the “core” CPI which excludes these two categories. However, every household or personal budget is different.

In the third quarter of 2023 , annual real GDP growth in the United States was 4.9% , up from 2.1% the previous quarter.

Among states, kansas led with the highest annual gdp growth in the third quarter of 2023 at 9.7%..

Gross domestic product (GDP) is used to estimate the size of the US economy. It is calculated as the total value of all goods and services produced in the US. It includes the total dollar amount of consumption (products like cellphones and bread), government spending (on things like infrastructure and the military), business investment (a manufacturer building a new factory), and the net effect of trade (subtracting imports from exports). The Bureau of Economic Analysis is the agency responsible for calculating GDP.

Most economists are interested in the rate of growth. Growth in the inflation-adjusted GDP ( or "real GDP") tends to signal a positive economic outlook, while slowing growth may mean a recession is coming.

Although the nation’s economy may be growing or shrinking on average, this growth is not uniform by location.

In fiscal year 2020, governments spent a combined total of $702.4 billion on the economy.

That’s $2,119 per person..

USAFacts categorizes government budget data to allocate spending appropriately, and to arrive at the estimate presented here. Government spending on the economy tends to increase in times of economic uncertainty. Recent increases in spending went toward supporting the financial sector in 2009 during the Great Recession and small businesses in 2020 during the pandemic.

The economic spending shown here is limited to support of general commerce, local development, technology infrastructure, and the financial sector. All government spending contributes to the economy overall.

Government revenue and expenditures are based on data from the Office of Management and Budget, the Census Bureau, and the Bureau of Economic Analysis. Each is published annually, although due to collection times, state and local government data are not as current as federal data. Thus, when combining federal, state, and local revenues and expenditures, the most recent year for a combined number may be delayed.

Economy articles

Who are the us’s top trade partners.

Over 50% of 2023 US trade involved one of five partners: Mexico, Canada, China, Germany, and Japan.

What is the Consumer Price Index, and what does it mean for the economy?

The CPI is a key indicator for the state of the economy.

What is inflation and how is it measured?

One of the most common economic indicators helps contextualize how much a dollar can buy.

What is gross domestic product, or GDP?

GDP is an overall measure of economic activity. How is it calculated and used?

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The US Economy Analysis

Introduction.

Despite the domestic challenges that America has faced over the years, especially following economic recessions as witnessed in the past, its financial system remains the largest and most significant across the world. In fact, the economy represents about 20 percent of the total global output. In addition, according to IMF rankings, the US has the sixth largest per capita income in the world. The dominant drivers of this expansive economy encompass the technological, services, financial, retail, and the health sectors. Nonetheless, just like most other economies, the economic growth of the US has been marked by phases of expansion, recession, and recovery.

Currently, the economy is still recovering from an economic turmoil caused by the global recession of 2008. As revealed in this paper, a number of factors such as policy failure, excessive risk-taking by financial institutions, widespread lending by the mortgage industry, and high government debts have been linked to the 2008 economic recession. Fortunately, the formulation and implementation of macroeconomic policy solutions by the US Federal government have been instrumental in speeding up the recovery and restoration of the economy to its initial glory. In this regard, experts including the IMF, remain optimistic concerning the future economic prospects for both the US and consequentially the global economy.

The US GDP and the Primary Measure of its Growth

As shown in Graph 1 below, between 2001 and 2007, the US economy experienced a slow but steady expansion at an average GDP growth rate of 2.5 percent. Moreover, the GDP grew from 12.682 trillion dollars in 2001 to 14.874 trillion dollars in 2007. During this period, the US economy experienced a boom in the housing market, as well as equity shares, resulting in record highs in profits by corporate firms.

In 2008, as revealed in Graph 1 above, the US economy sank into a recession with far-reaching impacts on economic indicators such as GDP, Real GDP, and nominal GDP. Moreover, Chang et al. highlight that the depression also resulted in a downturn of the US banking sector, the stock market, and a rise in unemployment (1). For instance, the recession led to a reduction in the Gross Domestic Product from 14.874 trillion dollars in 2007 to 14.830 trillion dollars and 14.414 trillion dollars in 2008 and 2009 respectively.

The depression also resulted in a fall in the growth rate from 1.8 percent in 2007 to -0.3 percent and -2.3 percent in 2008 and 2009 respectively. However, after the recession period of 2008-2009, the US economy has been in a phase of expansion and recovery at a steady rate of 2.0 percent. Subsequently, the GDP has grown from 14.419 trillion dollars in 2009 to 16.662 trillion dollars in 2016. The rate of growth has also been relatively low when compared to previous expansion periods such as the one between 2001 and 2007. For instance, the 2.0 percent growth expansion since 2010 is lower compared to that of 2.7 percent that existed between 2001 and 2007.

Factors that Led to the US Recession

According to Bordo, policy failure was a major catalyst that contributed to the US economic recession of 2008 (107). Specifically, the Federal Housing Administration failed to regulate the mortgage industry in an effort to push for affordable housing for Americans. This situation was actualized following the reduction of capital requirements by government-sponsored enterprises (GSEs) and consequently encouraging lending by mortgage institutions. As a result, the GSEs increased their profits, a move that further encouraged them to take more risks.

Furthermore, the Bush administration urged the mortgage institutions to increase their lending to low-income households. According to Bordo, the lack of a clear regulatory policy by the Federal Housing Administration resulted in poor lending standards, thus paving the way for money borrowing with little regard of income, assets, job, or documentation (107). Bordo (121) also highlights that the Fed’s choice in the targeted lending rather than the market liquidity provision exposed it to the temptation of politicizing the selection of credit recipients, especially the low-income families.

Despite such policies increasing the accessibility of the targeted recipients to credit, it also increased the number of risky subprime mortgages. This situation eventually led to the collapse of the mortgage industry due to the witnessed increase in defaulters. Another policy failure by the Fed as mentioned by Bordo regards the bailing out of insolvent firms such as Bear Stearns and AIG (122). Such policy actions only served to increase the appetite for credit lending by mortgage institutions through hiding the risky nature of the borrowing.

Another factor that has been associated with the 2008 economic recession is excessive risk-taking by financial institutions. Furthermore, a number of elements have been regarded as incentives to excessive risk taking by financial institutions that existed before 2008. One of these elements is compensation. The unregulated compensation mechanisms that were adopted by financial institutions may have partly been responsible for excessive risk taking by these institutions through their encouragement of unduly risk ventures.

The beneficiaries of unregulated compensation and excessive risk taking include traders, investors, investment bankers, and lenders. In this regard, two types of compensation asymmetries emerged because of excessive risk taking. One of these asymmetries was the treatment of losses and gains. For instance, while losses were part of the result of risk-taking ventures by financial professionals, there lacked a comparable cap on gains. This state of affairs implied that their compensation would never exceed a certain low while the gains remained limitless.

Secondly, there existed an asymmetry or imbalance between the magnitude, term, and the probability of losses and gains. For example, bonus arrangements were issued to reward financial professionals for their short-term results, even though they were later reversed following the 2008 recession. Such systems only encouraged these professionals to take greater risks that would bring superior rewards while concealing the losses that would have resulted from taking such risks.

Reavis believes that widespread lending by the mortgage institutions triggered the eventful US financial recession of 2008 (3). Before the crisis, financial institutions were accustomed to issuing high-risk loans and mortgages to people without any regard for their ability to repay the loan. The reduction in credit scrutiny resulted in a short-term boom of the housing market and consequently growth in the US economy. This growth resulted in an increase in household debt to GDP ratio from 50 to 100 percent by the mid-2000s.

Since most of the recipients of subprime mortgages lacked the ability to pay back the loans, they began to default. By 2006, the mortgage industry had begun showing indications of a burst. More people were beginning to default, with the number of foreclosures also increasing. As a result, the market prices for housing were pushed down, thus leading to a cessation of the trading of subprime mortgages by Wall Street giants. Eventually, small mortgage companies were left with huge debts from banks, a situation that also made them default their loans, thus triggering a collapse of the financial sector since many banks were declared insolvent.

Macroeconomic Policy Solutions that Led to the Recovery and Current Expansion

One of the macroeconomic solutions that have been instrumental in the recovery and current expansion of the US economy is the development and implementation of the Economic Stimulus Payments Act (Broda and Parker 26). This policy was passed and signed into law in 2008 by the American legislative body in an effort to encourage household spending. The payments consisted of basic and conditional reimbursements. Basic payments entailed a maximum compensation of 300-600 dollars for couples that filed the case jointly and a tax liability of up to 600 to 1200 dollars for those who did it discretely. On the other hand, households were issued with a conditional payment as a supplemental compensation of 300 dollars per child if they were eligible for the tax child credit. Broda and Parker note that the program distributed about 100 billion dollars to households and as a result increased their spending on goods and services (26).

Fitoussi highlights government bailouts as a policy response aimed at rescuing government mortgage lenders such as Fannie Mae and Freddie Mac (114). The two entities are said to have owned 76 percent of the US mortgages, thus making them a significant player in the 2008 financial crisis. Therefore, their bailout through covering all their losses by the Federal government was instrumental in the recovery of the housing market. Likewise, the government has also been involved in bailing out large financial institutions such as AIG since the failure of these institutions caused a freeze in the US credit market. However, Erkens et al. argue that the massive bailouts of these institutions by the Federal government after the 2008 recession may have diminished the positive effect of raising capital through equity by firms, consequently negatively affecting the long-term performance of these firms (402).

To counter the failed monetary guidelines by the Federal Reserve, the Federal Open Market Committee (FOMC) formulated two unconventional monetary policy tools. The tools consisted of the quantitative easing programs and explicit forward guidance for future federal funds rate. The two unconventional policies would provide the necessary accommodation regarding the monetary policy that would aid in ending the recession while subsequently strengthening the recovery of the economy. Moreover, the policy actions were instrumental in putting down pressure on interest rates in the long term, resulting in an improvement in the nation’s overall financial condition, including boosting the corporate equity and residential property prices. In turn, favorable financial conditions also helped to bolster aggregate demand, including checking unwanted disinflationary influences, through the increased support for household spending, investment, net exports, and construction.

Taylor asserts that one of the causes of the 2008 depression in the United States was the poor implementation of the existing regulatory policy by the New York Fed for financial institutions (4). As a result, the New York Fed intentionally or inadvertently allowed the financial institutions to sway from the existing safety rules, hence allowing them to take excessive risks. Taylor also affirms, “The main problem was not insufficient regulations, but a failure to enforce existing regulations” (5). In this regard, there have been many changes in the regulatory policy for financial institutions.

Taylor mentions the Dodd-Frank Act as one of the policy changes that have positively influenced the US economic recovery and expansion (6). The policy suggested a merger of the Office of Thrift Supervision into the Controller of Currency Office. Additionally, the Act created hundreds of new regulatory rules aimed at increasing dogmatic interventions in the financial sector. Furthermore, other regulatory policies have also been advocated and implemented such as the 30 percent increase in the number of federal workers who were involved in regulatory activities between the years 2006 and 2012.

Future Economic Outlook for the US and the Global Economy

According to Davis et al., the global economy has experienced a low growth rate since the end of the 2008 financial crisis (6). Moreover, interest rates have remained low, despite the increase in debt levels. This situation has resulted in the poor performance of government bonds that continue to record negative yields. Regarding income, real wages remain low in spite of the 80 percent of the global economy at full employment. This state of affairs has led to an increase in the inequality gap in both developed and developing markets. Regardless of the aggressive policy efforts by national economies such as the US aimed at countering deflationary shocks and bolstering economic growth, world economic growth has stagnated at low rates.

In addition, the low growth and high inflation of the US and global economy may restrain future growth rates unless drastic economic measures are taken. Central banks across the world are also said to reach a critical stage of exceeding the stipulated limits of monetary policies, resulting in attenuated benefits and increased economic risks. Davis et al. argue that the current economic strategies by central banks such as negative interest rates do not respond sufficiently to the existing and future economic pressures such as the weak demand, low consumer spending, unemployment, and reduced investments (7). Nonetheless, Davis et al. suggest that the right course of action, for instance, by the US Federal Reserve, would be to deliberately raise short-term rates to 1.5 percent in 2017 while also reducing its long-term projections to a rate a 2.5 percent (8). Such level would be more consistent with the global growth, thus improving the overall outlook of the economy.

On a positive note, Davis et al. believe that the potential growth in the global economy is poised to pick up modestly as time goes by (8). This assertion is based on the existing prospective growth in productivity rates, thanks to supportive structural factors such as a better utilization of innovative digital technologies, globalization, and demographic changes (an aging population, baby boomers and a decline in dependency ratios) followed by the recovery of the labor market since more unemployed people will get jobs in the technological companies. Furthermore, the slowing down of growth in emerging markets, a reduced accumulation of the US Fed reserves, and the continued increase in the level of global debts can put pressure on interest rates. This situation may reduce the cost of technology, consequently stabilizing future inflation rates and yields.

Similarly, the IMF remains positive on growth prospects in the global economy, which is currently estimated at 3.0 percent. This figure is in line with forecasts made on October 2016. Moreover, the IMF forecasts an accelerated growth in both emerging and advanced economies in 2017 and 2018 at the projections of 3.4 and 3.6 percent respectively. Specifically, advanced economies such as the US are projected to grow at a rate of 1.9 and 2.0 percent for 2017 and 2018 respectively. Nonetheless, these projections remain uncertain in the light of the probable changes in policy frameworks by the United States following the transformation in administration.

The US economy has experienced growth changes from expansion and depression to recovery. For example, between 2001 and 2007, the economy experienced a period of steady expansion at a rate of 2.7 percent. This development preceded a period of depression that lasted almost two years (2008 and 2009). During the downturn, the country’s GDP growth rate sank to rates of -0.3 percent and -2.3 percent in 2008 and 2009 respectively.

Factors that have been implicated as the causes of the depression include poor policy formulation and implementation, a widespread lending by mortgage institutions, and the excessive risk-taking by financial institutions. To counter the depression and regain growth, the US Federal government has been involved in the implementation of macroeconomic solutions. In this regard, four policies have been formulated. They include fiscal policies, for instance, the Economic Stimulus Act, monetary policies such as FOMC quantitative easing programs, and the explicit forward guidance and regulatory policy solutions such as the Dodd-Frank Act. The policies have been pivotal in the US post-depression expansion and recovery.

Works Cited

Amadeo, Kimberley. “ The Strange Ups and Downs of the U.S. Economy Since 1929 .” The Balance .

Bordo, Michael. “ The Federal Reserve’s Role: Actions Before, During, and After the 2008 Panic in the Historical Context of the Great Contraction. ” Economic Working Papers.

Broda, Christian, and Jonathan Parker. “The Economic Stimulus Payments of 2008 and the Aggregate Demand for Consumption.” Journal of Monetary Economics , vol. 68, no. 1, 2014, pp. 20-36.

Chang, Shu-Sen, et al. “Impact of 2008 Global Economic Crisis on Suicide: Time Trend Study in 54 Countries.” British Medical Journal, vol. 347, no. 1, 2013, pp. 1-15.

Davis, Joseph, et al. “Economic and Market Outlook: Stabilization, not Stagnation.” Vanguard Research, vol. 1, no. 1, 2017, pp. 1-39.

Erkens, David, et al. “Corporate Governance in the 2007–2008 Financial Crisis: Evidence From Financial Institutions Worldwide.” Journal of Corporate Finance , vol. 18, no. 2, 2012, pp. 389-411.

Fitoussi, Jean-Paul. After the Crisis . LUISS University Press, 2012.

Reavis, Cate. “The Global Financial Crisis of 2008: The Role of Greed, Fear, and Oligarchs.” MIT Sloan Management Review , vol. 16, no. 1, 2012, pp. 1-22.

Taylor, John. Causes of the Financial Crisis and the Slow Recovery: A 10-Year Perspective. Stanford University Press, 2013.

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Comprehensive Illegal Immigration Reform: A Persuasive Approach. (2024, Sep 17). Retrieved from https://papersowl.com/examples/comprehensive-illegal-immigration-reform-a-persuasive-approach/

"Comprehensive Illegal Immigration Reform: A Persuasive Approach." PapersOwl.com , 17 Sep 2024, https://papersowl.com/examples/comprehensive-illegal-immigration-reform-a-persuasive-approach/

PapersOwl.com. (2024). Comprehensive Illegal Immigration Reform: A Persuasive Approach . [Online]. Available at: https://papersowl.com/examples/comprehensive-illegal-immigration-reform-a-persuasive-approach/ [Accessed: 18 Sep. 2024]

"Comprehensive Illegal Immigration Reform: A Persuasive Approach." PapersOwl.com, Sep 17, 2024. Accessed September 18, 2024. https://papersowl.com/examples/comprehensive-illegal-immigration-reform-a-persuasive-approach/

"Comprehensive Illegal Immigration Reform: A Persuasive Approach," PapersOwl.com , 17-Sep-2024. [Online]. Available: https://papersowl.com/examples/comprehensive-illegal-immigration-reform-a-persuasive-approach/. [Accessed: 18-Sep-2024]

PapersOwl.com. (2024). Comprehensive Illegal Immigration Reform: A Persuasive Approach . [Online]. Available at: https://papersowl.com/examples/comprehensive-illegal-immigration-reform-a-persuasive-approach/ [Accessed: 18-Sep-2024]

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