State of the Economy

In: Business and Management

Submitted By adibski
Words 299
Pages 2
The real GDP based on chained dollars was $19,311.6 billion in the 4thquarter of 2014. The figure indicated a 2.6% change from the last quarter of 2013. The information is based on the press release of Friday, January 30, 2015. The nominal (current dollar) GDP was $17,710.7 billion. The figure was a 2.5% change from the 4th quarter of 2013.
A recession, also called an economic decline, is a period identified by a decrease in GDP rates in two successive quarters. In that period, industrial activity and trade are at a decline. In the last two quarters of 2014, GDP has been at an increase indicating that the country is not suffering a recession. In quarters 3 and 4 of 2008, the GDP was falling showing that the country was undergoing a recession then. It is essential to differentiate between real and nominal GDP because nominal GDP does not account for inflation and may thus give a misleading view of the current state of the economy. The affiliation between real GDP and unemployment is explained by Okun’s Law which states that a 2% increase in real GDP reduces unemployment by 1%.
There was a 0.8percentage increase (before seasonal adjustment) in the CPI-U in December 2014. The data is as per the Economic News Release of Friday, January 16, 2015. The inflation rate for the last six months was lower than that of the last 12 months. The lower rate is good since consumers are not charged more for products. It can be argued that a good rate of inflation is one where the rate remains steady over time thus eliminating uncertainty. The civilian unemployment rate was 6.6% for January 2014. The unemployment rate has been falling since November…...

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