Report on the State of the US Economy
a. Report (using charts) the quarterly data on the growth of real GDP and its four components (using the expenditure approach) starting with the third quarter of 2008. How would you characterize the Q1 2007-Q4 2012 period? How do the GDP growth rates for the last 4 quarters compare to the long-run trend for the US economy? According to the numbers what phase of the business cycle is the US economy currently in? Do you observe any important changes in the individual components of GDP?
b. Report the monthly (August 2012 ? February 2013) headline inflation (all items) and the core inflation rates for the US economy. What is the difference between the two inflation indicators? What is the 12-month inflation rate ending in February 2013? How does this number compare to the long-term trend for the US economy? Is inflation currently an issue for the US economy?
c. Report (in a chart/graph) the monthly unemployment rates for the US economy from January 2007 to February 2013. How do the numbers in different periods compare to the natural rate of unemployment for the US economy? How do the unemployment numbers relate to the GDP numbers? What types of unemployment do you think the US is currently experiencing?
d. Given the data above discuss the current state of the US economy. How does the current level of output compare to the potential level of output? Explain. Is the US economy currently at, above or below full employment? What do you think the US economy will look like in the short-term (next year) and in the medium-term (five years from now)?
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