ECO 372 Expectations
Expectations of the US economy
The last three quarters of the economy have been very strong and the fourth quarter week (Payne, 2014). While the fourth quarter’s poor performance is disappointing from an economic stand it is normal for there to be a weak fourth quarter after three strong quarters (Payne, 2014). All signs show that 2015 should be a year of growth for the US economy. Unemployment is expected to decline while GDP, Business spending and home sales are all expected to increase steadily by the end of 2015 (Payne, 2014). Inflation is expected to increase slightly by .3%, but with the expected growth in consumer spending due to record level job openings there should not be a slowdown of GDP.
This list was taken from Kiplingers article on the economic outlook and is a brilliant example of expected outcomes for 2015:
GDP
2% growth in Q4, with 3% likely in '15
Unemployment
5.8% at end '14; 5.3% by end '15
Interest rates
By end '15, 10-year T-notes at 3.1%; mortgages, 4.5%
Inflation
1.6% for this year; 1.9% for '15
Business spending
Up about 5% in '14; increasing by 7% in '15
Energy
Crude oil trading from $75 to $80/bbl. by Feb.
Housing
Starts up 20% in '15; new-home sales up 25%
Retail sales
Up 4.5% in both '14 and '15; noncar sales strengthening
Trade deficit
Widening by 5% in '14; 10% increase in '15
.
Aggregate Supply and Demand
A down swing unemployment will signify and upswing in more people with jobs and spendable cash. Both business spending and consumer spending should signify an upward slope in the aggregate supply curve and demand curve. As more consumers demand goods and services there must be products and services to fill the demand. Baring any supply shocks, shorter price changes or gross changes to expected inflation, the short-run aggregate supply should be upward slopping (payne, 2014).
Recommendations
Since we see the possibility of strong growth in 2015 it is my recommendation that government spending be slowed and taxes cut. This
The last three quarters of the economy have been very strong and the fourth quarter week (Payne, 2014). While the fourth quarter’s poor performance is disappointing from an economic stand it is normal for there to be a weak fourth quarter after three strong quarters (Payne, 2014). All signs show that 2015 should be a year of growth for the US economy. Unemployment is expected to decline while GDP, Business spending and home sales are all expected to increase steadily by the end of 2015 (Payne, 2014). Inflation is expected to increase slightly by .3%, but with the expected growth in consumer spending due to record level job openings there should not be a slowdown of GDP.
This list was taken from Kiplingers article on the economic outlook and is a brilliant example of expected outcomes for 2015:
GDP
2% growth in Q4, with 3% likely in '15
Unemployment
5.8% at end '14; 5.3% by end '15
Interest rates
By end '15, 10-year T-notes at 3.1%; mortgages, 4.5%
Inflation
1.6% for this year; 1.9% for '15
Business spending
Up about 5% in '14; increasing by 7% in '15
Energy
Crude oil trading from $75 to $80/bbl. by Feb.
Housing
Starts up 20% in '15; new-home sales up 25%
Retail sales
Up 4.5% in both '14 and '15; noncar sales strengthening
Trade deficit
Widening by 5% in '14; 10% increase in '15
.
Aggregate Supply and Demand
A down swing unemployment will signify and upswing in more people with jobs and spendable cash. Both business spending and consumer spending should signify an upward slope in the aggregate supply curve and demand curve. As more consumers demand goods and services there must be products and services to fill the demand. Baring any supply shocks, shorter price changes or gross changes to expected inflation, the short-run aggregate supply should be upward slopping (payne, 2014).
Recommendations
Since we see the possibility of strong growth in 2015 it is my recommendation that government spending be slowed and taxes cut. This