What Is the Current Macroeconomic Situation in the Us?

Decent Essays
What is the Current Macroeconomic Situation in the US? In June 2012, Federal Reserve Bank of St. Louis President James Bullard states, “the current stance of monetary policy is ultra-easy, and remains appropriately calibrated given the macroeconomic situation in the U.S” (St. Louis Fed’s Bullard, 2012, par. 1). The statement, however, is ambiguous and subsequent information provided by Bullard contained no real clarifications. For example, Bullard explained that the “policy rate remains near zero” and a “large Fed balance sheet remains in place” (par. 4). In response to comments that the Fed’s actions have only produced “very low nominal and real interest rates across the yield curve” (par.6), Bullard explains that his calculations…show more content…
Seasonally adjusted, the CPI for all urban consumers increase 0.6% consecutively in August and September while the index for all items excluding food and energy increase 0.1% during the same months.
Euler Hermes also reported that GDP growth, income and consumption remain positive but “are growing at below-trend rates” (par. 1) and the housing market remains stagnant. The group further projects that GDP growth is expected to remain positive but weak with growth of about 2% in 2012 and 2013. In the third quarter 2012, real GDP increased at an annual rate of 2.0% (from second to third quarter) with a real GDP increase of 1.3% in the first quarter (Focus on Economic Data, 2012). Fiscal policy remains in turmoil with issues such as those relating to payroll and Bush tax cuts and the likelihood of lifting the debt ceiling again (Economic Outlook, 2012).
At the last FOMC meeting, the Committee found the economy has continued to expand at a moderate pace and it reaffirmed its commitment to “maintain a stable price level, economic growth, and full employment” (Focus, 2012, p. 1). However, the FOMC also knows that “without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions” and that “strains in global financial markets continue to pose significant downside risks to the economic outlook” (p. 1). To promote continued economic recovery and to keep a check on inflation, the
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