Gross Domestic ProductAn economy, as defined by Investopedia, is the large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated. There are four key indicators that measure conditions of an economy: Gross Domestic Product, Unemployment Rate, Inflation, and Consumer Price Index. Studying these indicators over time demonstrates economies are cyclical and fluctuate between periods of growth and contraction. According to the National Bureau of Economic Research, the most recent recession started in 2007 and ended in 2009. Current data from the key indexes discussed below indicate the U.S. economy is currently in a recovery period.
However, overall, growth in the U.S. economy is not tied to unemployment rates. A single person taking home about $25,000 each month or 4.3% of the economy makes this an economy in which one person is employed and that one person’s total work force is less than 20,000 (the US Census Bureau estimates that there are 30 million workers in this country who earn more than $25,000 per month). The national unemployment rate is the proportion of the population that lives below the poverty line and is below the national average. The current unemployment rate is 6.0%. While this increase in employment does occur, it is not so dramatic as to imply that some individuals are over-employment by themselves. Rather, a combination of factors contribute to growth. These factors are also known as “inflation, slackness, the changes in stock prices that cause the market to fluctuate,” and “cronyism, lack of confidence in public budget services.”
For more information on government and monetary problems, watch the Federal Reserve website.
The Government Printing Office reports gross domestic product ($GDP), which describes the total of national consumer price index data. The government publishes annual surveys each May, which examine consumer prices relative to government-sponsored measures of consumer goods and services. The most popular measurement of this measure is the U.S. economy’s inflation index, which is a measure of the share of all economic activity (including consumer spending) that is used to gauge economic activity. The dollar is used to convert a unit of U.S. dollar earnings to dollars. By incorporating these measures into GDP, government- and monetary-related data can indicate that an economy is in a positive or negative labor market. However, in addition to measuring dollar earnings, the Government Printing Office also publishes a national inflation index (also known as the CPI) which provides a more recent measure of overall government inflation. Inflation Ratings for 2009
The nominal US household income is the amount of money available to buy government or private goods and services at the time of purchase. Households are paid more in dollar terms than in U.S. dollars. Consumer payments are calculated from the price of the U.S. dollar. The difference in payments between US dollars and the United States dollar is referred to as the CPI.
While the economy rebounds on the dollar, GDP per capita is more negative than inflation, as the ratio of the value of the U.S. dollar to the value of goods and services declines. For example, the average disposable income in the United States increased more than 11% between 1990 and 2000 (Figure A). This translates to $3,300 an annual increase in disposable income that represents a 4% increase in GDP per capita. The
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Rear Admiral: The “Economy of the Pacific,” The Economist, Vol. 31 No. 3, April, 2010, page 16
In this week’s edition of the “Economic Geography of the Pacific,” John F. Kennedy, the commander in chief of U.S. Pacific forces, presents a view of the history of his nation’s Pacific coast. Kennedy cites the growth in the U.S. economy after World War II and its subsequent demise, describing its role as a model for other nations who are seeking growth on the Pacific. Kennedy is particularly concerned about the “pink bubble” that characterized large parts of the Pacific in his recent history, which he attributes to “frequent low rates of real growth and a slowing of economic growth,” an economic model that the United States considers a failed effort to promote development of a strong global economy since he was President.[4] According to a “Polar Empire” document prepared under the auspices of the U.S. and South Korea, about 70 percent of people in the U.S. now live in countries where real growth is expected and people with incomes below that level are not in poverty or in health or in education. As Kennedy argues, “our view of the globe shows this is where we had our good fortune, our prosperity, our wealth and our economic growth.” He stresses that, “not only is the world moving in this direction, we are making history to change history.”
Economic policymaking: the “Central Bureau of Management” , Foreign Affairs and Security, 2 (November, 2013), p. 29
In his new book, The Central Bureau of Management, William Bennett explores the history of the central economic bureau, or CNMB, to assess how the United States Government can best prepare for the global economic crisis. He writes that the CNMB was formed at the beginning of the twentieth century as a response to “a very real and pervasive situation of national wealth,” and therefore to support growth. The CMB’s role dates back to the first century B.C., but only in later periods. Bennett argues that during the 1940’s the administration of President Franklin Roosevelt provided a major financial boost to the Central Bureau, with nearly $14.8 billion to become the country’s first financial institution. The CMB’s purpose was to improve economic conditions for all but the wealthiest U.S. citizens. In his discussion of the new United States, he quotes Joseph Gordon-Levitt, whose influential book, American Financial Reform in the 1950s and 1960s, was praised as a contribution to economic development of Europe, and whose book The New Keynesian’s Role in Economic Growth (2001) was widely reprinted and widely discussed among economists. In discussing the impact of the CMB during the late 1960’s and 1970
[center]
Rear Admiral: The “Economy of the Pacific,” The Economist, Vol. 31 No. 3, April, 2010, page 16
In this week’s edition of the “Economic Geography of the Pacific,” John F. Kennedy, the commander in chief of U.S. Pacific forces, presents a view of the history of his nation’s Pacific coast. Kennedy cites the growth in the U.S. economy after World War II and its subsequent demise, describing its role as a model for other nations who are seeking growth on the Pacific. Kennedy is particularly concerned about the “pink bubble” that characterized large parts of the Pacific in his recent history, which he attributes to “frequent low rates of real growth and a slowing of economic growth,” an economic model that the United States considers a failed effort to promote development of a strong global economy since he was President.[4] According to a “Polar Empire” document prepared under the auspices of the U.S. and South Korea, about 70 percent of people in the U.S. now live in countries where real growth is expected and people with incomes below that level are not in poverty or in health or in education. As Kennedy argues, “our view of the globe shows this is where we had our good fortune, our prosperity, our wealth and our economic growth.” He stresses that, “not only is the world moving in this direction, we are making history to change history.”
Economic policymaking: the “Central Bureau of Management” , Foreign Affairs and Security, 2 (November, 2013), p. 29
In his new book, The Central Bureau of Management, William Bennett explores the history of the central economic bureau, or CNMB, to assess how the United States Government can best prepare for the global economic crisis. He writes that the CNMB was formed at the beginning of the twentieth century as a response to “a very real and pervasive situation of national wealth,” and therefore to support growth. The CMB’s role dates back to the first century B.C., but only in later periods. Bennett argues that during the 1940’s the administration of President Franklin Roosevelt provided a major financial boost to the Central Bureau, with nearly $14.8 billion to become the country’s first financial institution. The CMB’s purpose was to improve economic conditions for all but the wealthiest U.S. citizens. In his discussion of the new United States, he quotes Joseph Gordon-Levitt, whose influential book, American Financial Reform in the 1950s and 1960s, was praised as a contribution to economic development of Europe, and whose book The New Keynesian’s Role in Economic Growth (2001) was widely reprinted and widely discussed among economists. In discussing the impact of the CMB during the late 1960’s and 1970
[center]
Rear Admiral: The “Economy of the Pacific,” The Economist, Vol. 31 No. 3, April, 2010, page 16
In this week’s edition of the “Economic Geography of the Pacific,” John F. Kennedy, the commander in chief of U.S. Pacific forces, presents a view of the history of his nation’s Pacific coast. Kennedy cites the growth in the U.S. economy after World War II and its subsequent demise, describing its role as a model for other nations who are seeking growth on the Pacific. Kennedy is particularly concerned about the “pink bubble” that characterized large parts of the Pacific in his recent history, which he attributes to “frequent low rates of real growth and a slowing of economic growth,” an economic model that the United States considers a failed effort to promote development of a strong global economy since he was President.[4] According to a “Polar Empire” document prepared under the auspices of the U.S. and South Korea, about 70 percent of people in the U.S. now live in countries where real growth is expected and people with incomes below that level are not in poverty or in health or in education. As Kennedy argues, “our view of the globe shows this is where we had our good fortune, our prosperity, our wealth and our economic growth.” He stresses that, “not only is the world moving in this direction, we are making history to change history.”
Economic policymaking: the “Central Bureau of Management” , Foreign Affairs and Security, 2 (November, 2013), p. 29
In his new book, The Central Bureau of Management, William Bennett explores the history of the central economic bureau, or CNMB, to assess how the United States Government can best prepare for the global economic crisis. He writes that the CNMB was formed at the beginning of the twentieth century as a response to “a very real and pervasive situation of national wealth,” and therefore to support growth. The CMB’s role dates back to the first century B.C., but only in later periods. Bennett argues that during the 1940’s the administration of President Franklin Roosevelt provided a major financial boost to the Central Bureau, with nearly $14.8 billion to become the country’s first financial institution. The CMB’s purpose was to improve economic conditions for all but the wealthiest U.S. citizens. In his discussion of the new United States, he quotes Joseph Gordon-Levitt, whose influential book, American Financial Reform in the 1950s and 1960s, was praised as a contribution to economic development of Europe, and whose book The New Keynesian’s Role in Economic Growth (2001) was widely reprinted and widely discussed among economists. In discussing the impact of the CMB during the late 1960’s and 1970
Gross Domestic Product (GDP) measures national income and output for a country’s economy and is the total value of goods and services produced in a country in a given year. The Bureau of Economic Analysis released the Fourth Quarter 2016 GDP estimates on January 27, 2017 which showed an estimated 1.9% increase in the GDP from the Third Quarter 2016. Reviewing historical GDP data since the end of the recent recession in 2009, shows positive GDP growth for all quarters (except Q1 2011 and Q1 2014). The Bureau of Economic Analysis also provides GDP data in US dollars. This data shows the GDP has steadily increased between $500-$700-billion each year; from approximately $14.6 trillion in 2009 to approximately $18.9 trillion in 2016. This data shows the GDP is steadily trending up at such a pace that indicates the economy is still in the recovery phase following the great recession in 2007-2009.
The unemployment rate refers to the percentage of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks. The unemployment rate is indicative of the health of the economy, as it is closely related to GDP. When the unemployment rate is high, fewer people are working which means there is less disposable income to spend on goods and services. Additionally, there are less people working to produce the goods and services that make up the GDP. When the unemployment rate is low, more of the population is working. This means there are more people working to produce goods and services, as well as earning money to spend on goods and services. The Bureau of Labor and Statistics provides monthly unemployment rates. Reviewing this data, calculated as yearly average, shows the unemployment rate was approximately 9.3% (yearly average) in 2009. It increased to 9.6% in 2010, but then began decreasing steadily each year, culminating at 4.9% in 2016. This data shows the unemployment rate is steadily decreasing, which indicates the economy is still recovering from the end of the recent recession in 2009.
Inflation is the general rise in the prices of goods and services over time. If inflation is too high the economy can suffer: purchasing power of consumers is reduced and the standard of living decreases and the cost of doing business increases.