Economic Growth Rate: United State of America

Introduction 

Over the decades, research and development have made this country a technology world leader and among the forefront runner in the global economy. Regardless of the Great Recession between 2008-2009 experienced in this country experienced as well as heavy spending on the Afghanistan and Iraq wars, it still maintained this position. Further, due to its capacity as a global power, it has always involved in most of the global affairs such as compliance on a large range of matter and enforcing a policy. This effort has included its active involvement in curbing illegal drug trade and global terrorism. The current advancement in growth rate is associable with government support for development and research projects, and a highly educated workforce. For instance, currently, it is the world leader in producing ground-breaking products such as biotechnology, computer technology, and innovative pharmaceuticals. Technology advances have made a major contribution to the GDP growth comparative advantage service and support industries such as scientific support, software production, and processing services.

GDP Growth Analysis 

Based on the bea.gov data, the average growth rate between the 50s and 90s was above 4 percent. Further, between the 70s and 80s, the rate dropped by 1% and since then it has fallen and stagnated below 2 percent in 2000. It is clear that the real GDP growth rate is equal to or below 2 percent as it has never exceeded 5 percent. In general, gross domestic product (GDP) involves the final price set for the end user for savings, goods, and investments changes. Therefore, this paper will concentrate on analyzing the previous historical low and low figures as well prediction of the GDP performance for the USA. The real GDP or the value of goods and services after the adjustment for inflation has remained depressed over the past decades. The GDP ranges between $941 billion and above $ 1.0 trillion below the output full employment by the end of the year 2013. However, from the third quarter of 2013 and the third quarter of 2015, a contractionary policy was embarked by the Federal. This meant that an average of 0.5 percent points drops of the growth rates which resulted in economic performance lagging behind. Further impact included a deceleration of 2015 annual real GDP growth by 1.5 percent and 2.0 for 2014 which had dropped from 2.4 percent in the year 2012 and 2.7 percent for the last six months of 2011. Subsequently, the fourth quarter of the fiscal year 2010, State, Federal, and Local fragged budget policy contributed to the lowered economic growth rate. Similarly, between 2009 and 2013 after the end of the recession, the economy began to grow at an annual average rate of 2.1 percent. It is at this recession period that more than 3.4 million jobs were lost and others more than 5.8 million jobs not gained.

Source: Bureau of Economic Analysis the author's analysis for National Income and Product Accounts public data series.

In the fiscal year 2013, the real growth rates lagged below 2.0 percent. Further, based on the BEA reports, in the first quarter of 2014, there was a contraction of 0.9 percent which resulted from drag in trade, business investment and inventories, and low consumer spending. However, within the last quarter of the fiscal year 2015, it increased to 1.4%. The annual rate of increase in the first quarter of the year 2016 averaged to 0.8 percent.

Based on the subsequent estimates reported by the BEA, it was expected that the economic growth rate will rise by 1.4%. This increase was associable with the buoyant consumer spending, high spending on home building, retail sales upsurge, state and local government spending, and contribution of personal consumption expenditure. Effectively, it demonstrated a reduction in exports and investment.

Economic Forecasts| 2018-2020 GDP Outlook 

The graphical representation demonstrates the actual trend of real GDP and the forecast for potential changes in real GDP over the coming fiscal years. This forecast is based on pre-recession data and some of the updated estimates from CBO trends in respect to the Great Recession. According to Joana Taborda, the recent rate of GDP growth rate, it has expanded with 2.5%. The economist from Focus panelist estimated annualized 2018 economic growth rate at 2.3 percent by the end of 2018. It is expected that this rate will maintain a level of 2 percent in 2020 which will be lower than the figures recorded in the 50s and 60s.

In the first quarter of 2018, the unemployment rate was recorded at 5.3% and 6.2%. It is expected that the inflation rate may upsurge to 1.6 within the first quarter of 2019 and 2.5 by 2020. Effectively, the interest rate of the U.S. economy will increase by 2.25%. As a result, the effect of changes in GDP will make FDI unattractive. However, before the economic crisis in 2008 where the decrease in interest rate resulted to inflated house prices and other household debt. This economic situation stabilized after the end of the recession.

References

Amadeo, K. (2013). What are the Components of GDP? About.com: U.S Economy. Retrieved on October 29, 2013,

http://useconomy.about.com/od/grossdomesticproduct/f/GDP_Components.htm.

Graddy, K., Krugman, P., & Wells, R. (2011).    Essentials of Economic s (2nd ed.). New York, NY: Worth Publishers.   

Taborda, J. (2013). United States GDP Growth Rate. Trading Economics. Retrieved on October 29, 2013, http://www.tradingeconomics.com/united-states/gdp-growth.