Eco 550

ECO 550

Analysis of the Business Cycle

The nation’s current economic state has many Americans wondering what has happened to the once monetary juggernaut known as the United States. A little more than a decade ago the U.S. had a large surplus of funds and was fostering a healthy economy. Now thanks to a variety of factors the U.S. has experienced one of the worst recessions in recent history. Many politicians and economist debate the Gross Domestic Product (GDP) and what it’s going to take to get the economy back stable; however they have not pinpoint one specific area of focus to accomplish this task. The GDP, the market value of all currently produced final goods and services within a country in a given period of time by domestic and foreign-supplied resources, is the most closely watched measure of economic activity.

The nation’s current economic state can be attributed to several factors. A stable U.S. economy relies on indicators such as consumer spending, unemployment, product development, tax cuts and energy costs. “Currently the GDP which is the output of goods and services produced by labor and property located in the United States, increased at an annual rate of 2.0 in the third quarter of 2011 (that is from the second quarter to the third quarter) according to the “second” estimate released by the Bureau of Economic Analysis”. (News Release: Gross Domestic Product. (n.d.). U.S. Bureau of Economic Analysis (BEA). Retrieved December 7, 2011, from http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm). In the second quarter, real GDP increased 1.3%.

The increase in GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports and federal government spending that were partly offset by negative contributions from private inventory investment and state and local government spending. The acceleration in real GDP in the third quarter primarily...