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INTRODUCTION– the American economy is said to experience highs and lows under the presidentship of Donald Trump. The gross domestic product (GDP) was calculated to be $20.93 trillion at the end of the year 2020. The data was given by the Bureau of Economic Analysis (BEA). This data represents a yearly decrease in the real GDP. The decrease was calculated to be 3.5%. On the other side of the spectrum, the first quarter of the year 2021 showed an increase in the real GDP. The increase was calculated to be 6.3%.
IS THE AMERICAN ECONOMY GETTING BETTER?
To say such a strong statement with utter confidence is hard for anyone. Some blame it on the COVID-19 situation. Commenting on this question, the answers can never be black or white. They will always be in grey. The American economy in trillions is currently said to be approximately $19.845 trillion. At the end of 2020, the gross domestic product (GDP) was said to be 20.93 trillion dollars. The GDP increased to 6.3%.
It is also exhibited that the American economy’s GDP grew at a rate of 4% annually in the fourth quarter of the year 2020. This was a hopeful sign. According to the Bureau of Economic Analysis, this increase in the GDP of the American economy was majorly due to the increase in exports.
There was a continuous improvement in the upcoming year too. The second quarter of the year 2021 showed an increase in the real gross domestic product (GDP) by 6.6%. According to the Bureau of Economic Analysis, this increase represented that there has been an improvement in the economic recovery, reopening of establishments, and the continuous response of the government about the COVID-19 situations.
April 2020 witnessed a peak in unemployment. It reached nearly 15%. This surge experienced a fall and came down to 5.4%.
CONSUMER SPENDING-
When the gross domestic product (GDP) of the American economy is dug, the first thing that catches the eye of an analyst is the value of consumer spending to the overall economy. The analyst will expect consumer spending to account for approximately two-thirds of the nation’s gross domestic product (GDP). This might be a reason for the pandemic’s hard-hitting blow on the American economy. The lockdown forced people to stay indoors which affected consumer spending as they were less likely to spend than usual.
Consumer spending in the year 2020 accounted for approx. $12.92 trillion. It was $13.36 trillion in December of the year 2019. This decrease was something to be pondered upon.
WHY DO PEOPLE FEEL THAT THE AMERICAN ECONOMY IS DEGRADING-
- SLOW WAGE GROWTH- the wage growth of the citizens has been slow for a decade. In 2012, the average household income was calculated to be $56,912. It was almost equal to what it was in the year 1988 after being adjusted to inflation. Post pandemic, wages did show growth in the second half of the year 2020. The year-to-year growth of wages fell slowly in 2021 with a significant decrease in growth by April. It then showed progress in the summer of the year 2021.
- REAL UNEMPLOYMENT RATE CONTINUED TO BE HIGH- official rate of unemployment before the pandemic hit was around 3.5%. This only considered the number of citizens that were on active job hunting. The labor force was not counted.
- U.S. DEBT- the debt when expressed as a part of the gross domestic product (GDP) was higher than the historic norms for over a decade. The debt to GDP ratio peaked during the 2008 recession and the trend never ended. The ratio became 100% in 2012 and since 2016 it has surpassed the economic output of the American economy. Due to the pandemic, the ratio peaked at 135% in the second quarter of the year 2020.
- OLD INFRASTRUCTURE OF AMERICAN ECONOMY- sources claim that traffic congestion costs the American economy $10 billion per year.
THE FEDERAL RESERVE-
The nation’s central bank is known as the federal reserve. The federal reserve can use tools to change its stand on monetary strategies.
- FEDERAL FUNDS RATE (FFR)- A target is set for FFR. The upper limit is the interest on reserve balances and the lower limit is the overnight reverse repurchase agreements.
- INTEREST RATES- interest on loans is charged by banks for among each other on the loans taken overnight. These rates in turn influence the rates charged by the banks on consumers.
- OPEN MARKET OPERATION- the securities can be bought and sold by the feds to make an effect on long-term rates.
CONCLUSION-
The American economy is said to be the world’s one of the largest economies. Donald Trump’s influence on it is dependent on the people’s perception. It functions as a command economy in defense and gives some retirement benefits and medical care.
