Essay on Predicting the Future of the United States Economy

1810 Words 8 Pages
It is to my belief that no one can possibly predict the future of the economy. Because of this we are faced with many questions that cannot be easily answered. Will the economy recover drastically or simply continue to increase moderately? Or could the economy in turn go into a recession? “There's been plenty of good news about the U.S. economy… employment is expanding (2.4 million new payroll jobs in the last year); inflation remains low (less than a 2 percent rate in the past quarter); the stock market is higher (up 11 percent on the Dow from its November low), and business investment is impressive (rising at a 14 percent rate in late 2004).” (1) It is my opinion that unless something drastic happens in the world today, positive or …show more content…
personal consumption, 2. gross private consumption, 3. government consumption and gross investment, and 4. net exports to foreigners. When adding these four components the total is equal to GDP. Personal consumption is the largest component of GDP. It consists mostly of nondurable goods and services such as food, clothing, entertainment, and medical and legal services. These items are consumed in a short period of time. Personal consumption also consists of durable items that last for longer periods of time such as appliance and cars. Gross private consumption is the production or construction of goods that will provide for the economy in future. Business plants and equipment are examples of gross private consumption because they will produce goods and services in the future. Government Consumption and Gross Investments are expenditures on items such as office supplies, law enforcements, and veteran’s hospitals. These purchases are valued at the cost to taxpayers rather than their value to those receiving the goods and services. Net exports are total exports minus imports. In recent years, net exports have been negative. This shows that we are buying more goods and services from foreigners than we are selling to them. When using the Resource Cost-Income Approach to measure to GDP it is equal sum of the following three components: 1. aggregate income (compensation of employees, income of self-employed proprietors, rents, profits, and interest), 2. non-income cost