This solution focuses on the January 29, 2010, first
estimate of U.S. real gross domestic product (Real GDP) for the fourth quarter
of 2009, reported by the U.S. Bureau of Economic Analysis (BEA). The current
data and historical data are explained. The meaning of GDP and potential
impacts of changes of GDP are explored. This solution will also raise questions
about the impact of the current level of growth on the U.S. economy and
individuals.
Here is an interesting article that was published the same
day:
Rampell Catherine. “US Economy Grew at Vigorous Pace in
Last Quarter.” New York Times January 29, 2010. Retrieved February 22,
2010. Retrieved May 17, 2010 from:
http://www.nytimes.com/2010/01/30/business/economy/30econ.html
Introduction:
Each month, the Bureau of Economic Analysis (BEA), an agency
of the U.S. Department of Commerce, releases an estimate of the level and
growth of U.S. gross domestic product (GDP), the output of goods and services
produced by labor and property located in the United States.
This solution focuses on the BEA’s “first
estimate” of real GDP released on January 29, 2010, for the fourth quarter
(October-December of 2009. Understanding the level and rate of growth of the
economy’s output (GDP) helps to better understand growth, employment trends,
the health of the business sector, and consumer well-being.
Current Key Economic Indicators (as of January 29, 2010)
Inflation
On a seasonally adjusted basis, the CPI-U increased 0.1
percent in December 2009 after rising 0.4 percent in November. The index for
all items less food and energy rose 0.1 percent in December after being
unchanged in November. (January 29, 2010)
Employment and Unemployment
U.S. nonfarm payroll employment edged down (-85,000) in
December, and the unemployment rate was unchanged at 10.0 percent. Employment
fell in construction, manufacturing, and wholesale trade, while temporary help
services and health care added jobs. (January 8, 2010)
Real GDP
U.S. real gross domestic product (real GDP) increased at an
annual rate of 5.7 percent in the fourth quarter of 2009 (from Q3 to Q4). In
the third quarter, real GDP increased 2.2 percent. (January 29, 2010)
Federal Reserve
The FOMC will maintain the target range for the federal
funds rate at 0 to 1/4 percent and continues to anticipate that economic
conditions, including low rates of resource utilization, subdued inflation
trends, and stable inflation expectations, are likely to warrant exceptionally
low levels of the federal funds rate for an extended period. (December 16,
2009)
The size of the US. economy increased at an annual rate of
5.7 percent in the fourth quarter of 2009. The economy is growing and prosperity
just around the corner. Right? Read more about the Q4 2009 GDP data and decide
for yourself:
Solution Expectations:
-4 to no more than 5 pages double spaced Times New Roman 12
point
-Answer the following;
1. What data from the BEA announcement supports the NBER
decision that the U.S. is in a recession?
2. What measures did the U.S. government take to increase
GDP during this time?
3. Recent GDP Data in Detail
Table 1 of the BEAâ??s January 29, 2010 real GDP estimates
is a detailed breakdown of the data by sector and specific types of goods and
services, investments, and trade, from 2006 through 2009.
Go to Table 1 at:
www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp4q09_adv.pdf
Take a good look at the data. What are the areas of growth
and decline? Was the data (growth rates) consistent throughout the period of
time? Summarize your interpretation of the data in Table 1.
