Primary Concerns of Macroeconomic Analysis

Using quantitative easing has helped the recovery of the USA and other developing countries. The Fed’s then limited their ability to pursue more measures, but congress ignored those appeals to help support the economy. The Fed’s decided to use smaller steps to help investor expectations and to prevent a possible financial crisis in Europe. In 2011 it was announced that the FED’s would hold short-term interest rates close to zero percent through 2013; to help support the economy. Soon after it was announced that using the “twist” operation would push long-term interest rates down, by purchasing $400 billion in long-term treasury securities with profits from the sale of the short-term government debt. Inaugurating a policy to help shape market expectations, which will raise interest rates at the end of 2014.

There are several factors that affect our economy, gross domestic product (GDP), real GDP, nominal GDP, unemployment rate, inflation rate, and interest rates. All of these factors have influences over how we purchase groceries, weather there will be massive layoffs of employees, and decrease in taxes.

1. If an economy produces final output worth $5 trillion, then the amount of gross

The objective of the American Recovery and Reinvestment act, also known as the “stimulus” was to end the recession that had occurred in 2008. The recession had a major impact on the U.S job market. The United States congress approved the act which consisted of an investment of 787 billion dollars in order to encourage customer spending and also to save old jobs and create new ones.

The American Recovery and Reinvestment Act of 2009, otherwise known as the Stimulus Bill, was one of the first major pieces of legislation passed by the new Democratic Congress in 2009 and signed by newly inaugurated President Barack Obama. The legislation was an attempt to take the United States economy out of a major recession through federal spending. The motivation for this bill was the collapse of the housing market bubble and the mortgage crisis. A result of these problems was the decline of consumer and corporate credit, causing monetary liquidity in the economy. Obama argued that the economy needed a “jump-start” to get moving again; that being the stimulus of 2009. Drafts for the bill called for as little as $275 billion in spending,

Today the United States Americans more than ever; there is a constant fear of an awaiting recession due to the economy. The recession in the later 2000’s has been known as the greatest economic decline since the Great Depression. The United States of America, the banks and businesses are not able to succeed and are failing due to the market. Many people across America cannot afford their homes or bills due to the unemployment rate that seems to keep increasing. Many people blame this on the higher oil or gas prices, and the wars that the United States acts on. The recession has overall declined our economic activity in business profits, employment, and investment. This is all due to our falling market, and the rise of prices that so many Americans cannot afford.

The United States Federal Reserve has been conducting open market operations in the financial markets since 2008 in order to drive down interest rates and promote economic growth following the 2007-08 financial crisis. The subsequent recession, dubbed the Great Recession, destroyed $19 trillion in household wealth and nearly 9 million jobs. The highly controversial quantitative easing (QE) program, which refers to the process of introducing new money into the money supply, has been effective in promoting US recovery over the past six years.

A current elasticity issue is the U.S. Federal Government deficit spending that incurred a large national debt in which had a negative affect on our economy. “The U.S. Federal Government has spent more money than what it is bringing in for Americans. This is known as the ‘crowding-out effect’ which causes the Federal Reserve to increase unaffordable interest rates. In a recent Los Angeles Times article, 2011, Tom Petruno reports that, “as of June 18, 2011, the Federal Reserve has been trying to bail the U.S out of debt in the past year by purchasing the Treasury’s Net bond issuance and created $600 billion new paper bills for the financial system via bond purchases since November 2010.” (Petruno, 2011) On March 15, 2011, the Board of Governors of the Federal Reserve System (FBR) reported that, “the Fed Committee is promoting a stronger pace for economic recovery and have expanded its holdings on securities. They have reinvested principal payments from the security holdings and will invest an additional amount of $600 billion into long-term treasury securities by the end of the fiscal year. Feds state that household expenditures, business investments in equipment, and software continue to expand throughout the nation. The nonresidential structures remain weak at this time and the housing sector is still depressed. There have been some improvements in the labor market that is slowly decreasing the unemployment rate.” The Fed Board

After the crash of the market in 2008, Obama created the American Recovery and Reinvestment Act. The act was an “economic stimulus package”(Amadeo). The act would cost $787 billion. The act was meant to help families and small businesses instead of big business so that people in the United States could put trust into the system again which could stimulate spending and growth. For the purpose of stimulating demand, $260 million was put into cutting taxes, tax credits, and unemployment benefits (Amadeo). This included things like tax credit for first-time homebuyers, college tuition, and extended unemployment benefits. Stimulating demand and trust from the people was the biggest fitting puzzle piece of the stimulus package. The only way for an economy to flourish is when people get extra money that they can spend which would create growth in consumer

The United States is considered to be the world’s largest national economy. The United States have proven time and time again that its economy is one that should be modeled after by showcasing a proven track record. Although its economy is considered the largest, it has had its problems such as the Great Depression and the Recession that have taken placed recently beginning in 2007 lasting until mid 2009. Both of these economic down turns are similar in nature which has caused many to feel negative effects,

Over the past decade, the Fed has responded fairly to inflation and unemployment. According to the Federal Reserve (2017), between late 2008 (the era of the Great Recession) and October 2014, the Federal Reserve purchased longer-term mortgage-backed securities and notes issued by certain government-sponsored enterprises, as well as longer-term Treasury bonds and notes. In essence, lowering the level of longer-term interest rates and improving financial conditions (the Fed.com, 2017).

To stabilize the economy bonds are used which release money into the market. The responsibility of the Central Bank is to maintain the health of the banking system and regulating the purchase and sale of bonds. The interest rates are controlled to balance the markets. According to the Monetary Policy Report to Congress, “The Federal Open Market Committee (FOMC) maintained a target range of 0 to ¼ percent for the federal funds rate throughout the second half of 2009 and early 2010” while representing forecasted economic decisions to rationalize low levels for longer times on the federal funds rate (Federal Reserve, 2010). Purchases were still being made by the Fed’s to result in improvements to the economy through focusing on mortgages, the real estate market, and the credit market. Predictions by the Federal Open Market Committee depicted low levels on the federal funds rates in early 2010 which would continue for some time while over time the economy would see growth, a rise in inflation, and a decline in unemployment. Feds were in agreement though they expected the recovery process to be slower. Purchases by the Federal reserve were slowed, “$300 billion of Treasury securities were completed by October” and “the purchases of $1.25 trillion of MBS and about $175 billion of agency debt” were suppose to be finished the first quarter of 2010 (Federal Reserve, 2010).

“The Central Bank also raised concerns about the Feds lower interest rate encouraging rising demand for junk bonds and risky real estate investments and shifts in bank balance sheets as areas of concern. Mr. Bernanke said the Fed took these concerns very seriously and noted the central bank had significantly widen its efforts to monitor financial markets as well as greater priority to financial

federal reserve to buy treasury bills which are the safest of investments. However at the time the federal reserve was only offering a 1% interest rate. It was so low because the federal reserve chairman had to make a change in response to the “.com bust” and helping the economy stabilize. 1% interest rate meant that theses investors would not get much back on their investment. On the flip side this also meant that banks could get barrow from the reserve for only 1%. This gives the bank and abundance of cheap credit, with the,

1. Select three macro-economic indicators that you feel have the greatest impact on the operations and/or planning for your SLP organization. Remember that an economic indicator measures a change in the general or in a specific aspect of the economy and you should be assessing how each macro-economic change you have chosen affects your company. Explain why they are important to the current or future condition of your organization.