Current Macroeconomic Situation in the USA Essay

Current Macroeconomic Situation in the USA - Essay Example The currency has not changed much in comparison to the Yen (OECD Publishing, 2012). The economic meltdown of 2008 greatly affected the prospects of the US economy and still hangs over the current economic situation. As a result, the current macroeconomic situation appropriately echoes the 2008 economic crisis in a highly significant manner. First is the aspect of slow growth where the American economy has been lethargic ever since the economy collapsed in 2008. Slow economic growth is currently prevailing in the United States, and economic development is occurring at a dawdling pace. It is estimated that the economy will grow at the rate of 2% through 2014. This is an indication that the economy will take more time to recover fully. Other predicaments affecting the economy of the United States include unemployment, inflation, and recession. Unemployment is at a very high level and is mainly caused by slow growth of the economy. As the economy takes more time to grow there are very fe w opportunities for employment, making it difficult to end the current problem of unemployment. Inflation is also a major problem affecting the US economy, which involves the incessant rise of prices of commodities. Inflation has partly been contributed by the current spate of economic stimulus programs, which have pumped a lot of funds into the economy with the aim of stimulating growth and creating job opportunities. Is the U.S. economy currently concerned about unemployment, inflation, and recession? The US economy is presently concerned about unemployment, inflation, and recession. These have been the principal factors affecting the economy ever since the 2008 economic meltdown (Leboeuf, 2012). The administration has injected trillions of money into the economy to stop the recession. There has been debate over the effectiveness of this strategy as to whether it will create inflation. At this position in time, America is experiencing age of "severity" an era of recession worst fr om the time of the "immense depression." In essence, recession is nastiest than inflation during this point of economy. Inflation and greed is an excellent thing for the economy to generate jobs to progress the economy when the economy is in a slump. Mr. Friedman counsel has stood the experiment of time with numerous Presidents inquiring about suggestions from him. America requires some type of "inflation" to provide the economy the thrust it need at this instance, certain the interest rates are low down, but Americans do not have the required assurance to either endow or spend to provide the economy the further it needs. America requires assurance at this time to twist the economy around. Americans as well need employments maybe the imminent election will modify the image we have at this occasion, numerous people are hoping. The US economy is primarily concerned about unemployment, which is a serious headache in the United States today. Slow economic growth is the chief reason for high unemployment cases. The US economic development has been very sluggish right from 2008 when the economy slipped. Job creation has been remarkably low in the United States creating a large population of individuals without jobs. Apart from concern over unemployment, the US economy is equally apprehensive about recession and inflation which as well have exerted a lot of pressure on the economy of

The Bond Market Research Paper Example | Topics and Well Written Essays - 1250 words

The Bond Market - Research Paper Example On the other hand, corporate debt refers to the property owned by a business, which can serve as an income distress absorber to a specific class of stakeholders. This paper intends to outline the issues that surround bond market in the current market. The U.S. Federal Reserve (â€Å"the Fed†) plays a progressively active role in the performance of the economy and financial markets with its numerous tools. How does Federal Reserve policy affect the bond market? Essentially, the Federal Reserve plays a key role in providing a monetary climate, which is intended in promoting economic stability and simultaneously maintaining consistent economic growth. The Federal Reserve strives to maintain the peaks and troughs at minimum levels. It is impertive3 to note that the Federal Reserve accomplishes their role through manipulation of two interest rate levels (Brett, 17). They include the Federal Funds rates and the Discount Rate. The Federal Funds rate refers to the rates banks charge e ach other to borrow reserves overnight while refers to rate the Federal charges for bank reserve borrowing. It is significant that, changes in both rates have a direct impact on the bond market, yield levels. It is imperative to note that, the corporate bonds always yield more than the government bonds. This is to account for the risk. The Federal Reserve plays a key role in influencing the bond market by controlling the prices and rates of bonds. This enhances controlling of the inflations rates. For instance, investors who buy bonds with a maturity period longer than a couple of years ago have augmented risk disclosure to the level of inflation and its attrition of prospect cash flow values (Brett, 15). However, the Federal Reserve moderates this situation by targeting the level of inflation because inflation expectations have bigger shock on the echelon of interest rates for prolonged maturity bonds than shorter outcome consequently, regulation of the bond market. For the case of bonds with long maturity number of years, the Federal Reserve endeavors to regulate inflation rates. This is because, the levels of inflation directly affects the inflation of expectations consequently increased level of interest rates for longer maturity bonds than shorter maturity bonds (Brett, 16). Fundamentally, the Federal Reserve directly controls the shorter maturity yield levels. The influence caused by the Federal Reserve on the interest rates consequently, significant change is indicated in the levels of yields. The yield curve normally represents the yield market levels. More over, Brett asserts that, the current bull market in bonds will only end if inflation rates rise. This implies that, the current economic status is sluggish and it is characterized by unemployment and high rate of inflation. Bibliography Brett Arends. Bonds- Heading from Bull Market to Bubble. The Journal of The Wall Street. 15.9 (2012): 15- 19. Print. What happens to interest rates as bond prices r ise? The bond markets are extremely active. The interest rates are constantly changing in response to numerous factors, which include changes in demand and supply of credit, market psychology, economic conditions, fiscal policy, Federal Reserve policy and exchange rates. It is significant to note that, as interest rates change, a consequent change in values of all bonds in the market place is expected. For instance, when, interest rates increase bonds with longer maturity periods are immensely affected compared with those