Virginia Commonwealth University The Current US Economy and Its Future Paper

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zbz2014

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Economics

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Virginia Commonwealth University

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Using the following resources and adding other credible ones analyze the current US economy and its future, even add how it was impacted by the COVID-19. Include numbers. Think GDP, population growth, currency risk, inflation, unemployment, housing, discretionary income, etc.

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BUSINESS ENVIRONMENT REPORT B104 Consumer price index April 2020 WWW.IBISWORLD.COM 1-800-330-3772 INFO@IBISWORLD.COM Consumer price index Key Statistics April 2020 Estimated value in 2020: 257.9 index points 2015-2020 Compound Growth: 1.70% Forecast value in 2025: 284.7 index points 2020-2025 Compound Growth: 2.00% Current Performance Movements in the CPI influence economic decisions in several circumstances. Firstly, the Federal Reserve uses the Personal Consumption Expenditure Price Index, a similar measure of inflation, to guide their monetary policy implementation. Inflation above a certain rate has several negative effects on economic growth, which monetary policy tries to avoid. In a growing economy, positive inflation is a result of this growth and deflation typically occurs during a recessionary period. Consequently, a low and steady level of inflation is the standard target. Governments also look at movements in the CPI when making fiscal policy decisions, as expansionary fiscal policy increases aggregate demand but creates inflationary pressures, which puts pressure on monetary policy. Furthermore, movements in the CPI are used to influence wage negotiations for workers and unions. In 2007 and 2008 the CPI grew 2.9% and 3.8%, respectively. In 2008, inflation grew strongly over the first four months of the year, but surged between May and July, driven by high energy and food prices. However, as the recession's grip began to spread around the globe, there was a rapid decline in overall commodity prices in the final quarter of the year. The fall in commodity prices continued through 2009, causing the CPI to record its first annual decline in over three decades. The dip was led by transportation prices, due to a 28.0% fall in motor fuel prices, caused by the swift contraction in world oil demand. Additionally, airline prices and other intercity transportation costs slipped by 9.0% and 6.0%, respectively, due to softer demand for domestic and international travel. Over the years immediately following the recession, CPI rose 1.6% in 2010, 3.2% in 2011 and 2.1% in 2012. Since then, fears of an extended period of deflation have proved to be largely unfounded, as the economy began its gradual recovery. In 2015, the CPI grew a slight 0.1%, as the large monetary expansion efforts struggled to filter to consumers as commercial banks did not extend loans. Moreover, sharp declines in the price of crude oil and other key commodities limited price growth in 2015 and 2016. Nevertheless, the CPI grew 1.3% in 2016. According to the BLS, from January 2016 to January 2017, there was a 3.6% increase in medical expenses that was countered by a 0.2% decline in total food prices. Still, the primary factor driving growth was a 10.8% increase in energy prices. More specifically, motor fuel costs increased 20.2%. In 2020, the CPI is expected to increase just 0.9%, as the demand loss stemming from the COVID-19 outbreak and collapse of energy prices have weighed on prices significantly. The Consumer Price Index (CPI) is used as a measure of inflation from year to year. This report focuses on the headline inflation rate for all urban consumers, which is measured using the changes in price for a predefined "basket of goods and services". The basket includes food, beverages, housing, energy, clothing, transportation, medical care, recreation, education, communication and other expenses, such as haircuts, funeral expenses and tobacco. The index is anchored at a value of 100 between 1982 and 1984. Data for this report is sourced from the Bureau of Labor Statistics (BLS). Outlook Consumer spending, the factor driving up demand for goods and services that pushes price levels up, is expected to rebound following the worst year of consumption growth since the Great Depression. As energy demand catches up to the recent oversupply, energy price increases are expected to place upward pressure on the overall CPI. However, employment and economic growth are expected to moderate after an inital recovery period in 2021 and 2022, limiting price level appreciation. Barring any external shocks and assuming consistent and slow-moving monetary policy, the CPI is expected to increase at an annualized rate of 2.0% over the five years to 2025. WWW.IBISWORLD.COM 2 Consumer price index April 2020 Data Volatility Year Index % Change Year Index % Change 1980 82.41 N/A 2004 188.88 4.9 1981 90.93 8.5 2005 195.29 6.4 1982 96.50 5.6 2006 201.59 6.3 1983 99.60 3.1 2007 207.34 5.8 1984 103.88 4.3 2008 215.30 8.0 1985 107.57 3.7 2009 214.54 -0.8 1986 109.61 2.0 2010 218.06 3.5 1987 113.63 4.0 2011 224.94 6.9 1988 118.26 4.6 2012 229.59 4.7 1989 123.97 5.7 2013 232.96 3.4 1990 130.66 6.7 2014 236.74 3.8 1991 136.19 5.5 2015 237.02 0.3 1992 140.32 4.1 2016 240.01 3.0 1993 144.46 4.1 2017 245.12 5.1 1994 148.23 3.8 2018 251.11 6.0 1995 152.38 4.2 2019 255.66 4.6 1996 156.85 4.5 2020 257.87 2.2 1997 160.52 3.7 2021 262.84 5.0 1998 163.01 2.5 2022 268.89 6.0 1999 166.58 3.6 2023 274.36 5.5 2000 172.20 5.6 2024 279.59 5.2 2001 177.07 4.9 2025 284.72 5.1 2002 179.88 2.8 2026 289.86 5.1 2003 183.96 4.1 WWW.IBISWORLD.COM 3 IBISWorld helps you find the industry information you need – fast. With our trusted research covering thousands of global industries, you’ll get a quick and intelligent overview of any industry so you can get up to speed in minutes. In every report, you’ll find actionable insights, comprehensive data and in-depth analysis to help you make smarter, faster business decisions. If you’re not yet a member of IBISWorld, contact us at 1-800-330-3772 or info@ibisworld.com to learn more. DISCLAIMER This product has been supplied by IBISWorld Inc. (‘IBISWorld’) solely for use by its authorized licenses strictly in accordance with their license agreements with IBISWorld. IBISWorld makes no representation to any other person with regard to the completeness or accuracy of the data or information contained herein, and it accepts no responsibility and disclaims all liability (save for liability which cannot be lawfully disclaimed) for loss or damage whatsoever suffered or incurred by any other person resulting from the use of, or reliance upon, the data or information contained herein. Copyright in this publication is owned by IBISWorld Inc. The publication is sold on the basis that the purchaser agrees not to copy the material contained within it for other than the purchasers own purposes. In the event that the purchaser uses or quotes from the material in this publication – in papers, reports, or opinions prepared for any other person – it is agreed that it will be sourced to: IBISWorld Inc.
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U.S Economy
Thesis statement: Evaluating the U.S economy current and future economy and the effects of
COVID 19 on the economy.
1. Introduction
2. Gross Domestic Product
3. Unemployment
4. Trade
5. Conclusion

Running head: U.S. ECONOMY

1

U.S. Economy
Institution Affiliation
Date

U.S. ECONOMY

2

Introduction
The U.S. economy has been dramatically affected by the COVID-19 pandemic, which hit
the country towards the end of the fourth quarter of 2019. The epidemic has affected all aspects of
the current economic state and, consequently, the future financial state as statistics predict. The
country's economy ranging from the gross domestic product, unemployment, inflation, among
others, continue to be affected by the pandemic. Similarly, the last quarter of 2019 trade wars
between China and the United States had led to predictions of a declining economy in the future
and especially in 2020. Therefore, despite the country having one of the world's most robust
economies, the current and future state of the economy is threatened by various challenges facing
the country and the globe.
Gross Domestic Product
One of the most affected sectors of the economy is the gross domestic product (G.D.P.),
which measures the country's production output. The G.D.P. was predicted to decrease to 2.0% in
2020 from 2.2% in 2019, which was attributed to the trade wars in the country. The trade war
characterized by trade tariffs, which led to sales tax and raise in the cos for consumers. Importantly,
the G.D.P. is being affected more by the COVID 19 pandemic, and this may cause further decline
with the closure of the business. Most of the businesses in the United States have been shut down,
leaving only the essential service providers to operate. It has affected many businesses with the
industrial sector, tourism, travel, and hospitality being among the most affected sectors. These
sectors contribute significantly to the country's growth in terms of revenue and employment, and
therefore their closure dramatically affects the economy.
Unemployment

U.S. ECONOMY

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Unemployment in the country was declining in the year 2019, with even further predictions
of growth in the labor market. There is a prediction that unemployment will average between 3.6%
to 3.9% between ...