Inflation rate can be defined as the percentage rate at which prices of goods and services change over a period of time (Sheffrin 7). As a matter of fact, it can also be referred to as the rate at which the purchasing power of individuals’ changes as time goes by. In this case, inflation rates can be used to calculate interest rates and any expected increase in wages (Inflation rate 11). Inflation rate is measured by looking at the current average price level and the price level that had been witnessed a year ago.
The USA inflation rate has been changing as time goes by in 2010. It should be known that the government calculates its inflation rate to one decimal place. As a matter of fact, it has been ranging from 2.63% to 1.05% (Forecast 8). In December 2010, the inflation rate stood at 1.2%. This rate is expected to stabilize in January 2011 at 1.3% (Inflation rate 17). The country is in a stable period of prices because this inflation rate is manageable and good for the economy. This will keep prices within the reach of various consumers.
Unemployment rate can be defined as the percentage of a country’s labor force that doesn’t have jobs but they are looking for jobs and at the same time willing to work (Ruhm 14). The unemployment rate can be arrived at by dividing the number of unemployed persons with the country’s total labor force (Ashley 9). In this case, the labor force is the total number of employed persons and the total number of unemployed persons in a given economy.
The USA unemployment rate has been changing as time goes by. This is more so after the global financial crisis. As a matter of fact, the country’s unemployment rate was last recorded at 9.80% in November 2010 (Forecast 17). The country’s inflation rate has been manageable all along and it has never reached such highs. Such an unemployment rate was last witnessed in 1982 at 10.80%.
This unemployment rate will not cause deflation. This is because deflation only occurs when the average inflation rate falls below 0%. As much as the economy is still recovering, this will not cause a reduction in the supply of money to warrant deflation. A labor market can also be termed as an informal market (Blades 13). In this market, workers compete for various jobs in the economy. On the other hand, employers also compete for existing workers.
The current labor market structure is characterized by a lot of labor supply with less demand. Companies are still picking up after the global financial crisis and they don’t have enough capacity to employ people. This labor market structure will not lead to cost push inflation because the cost of doing business in the country has not increased to push up various manufacturing costs (Economy watch 9).
In the mean time, this structure will have a little impact on deflation as time goes by. This is because the market is still readjusting for sustainability.
Growth rate can be defined as the year on year change that a given country will experience as far as its economic performance is concerned. As a matter of fact, it is an increase that a given variable will gain as time goes by (Trading economics 13). GDP is the amount of goods and services that a given country can produce at a given period of time. GDP is calculated by looking at the market value of the country’s goods and services (Wieseman 9).
The USA GDP is estimated to have expanded by 2.60% in the third quarter of 2010 (Trading economics 16). As a matter of fact, the country has a market oriented economy. In this case, individuals and private companies are free to make their own decisions. There are good future predictions because the GDP growth rate is expected to increase as time goes by. In December 2010, GDP was $14, 834 while it is estimated to reach 14,952 in January 2011 (Trading economics 18).
Income distribution can be described as the approach that is used to distribute a nation’s total economy among its citizens (Sudhir 15). Income distribution has mostly been represented or defined by the Lorenz curve. The distribution of income has mostly been unequal for a long period of time. In this case, it is argued that those in the top two quintiles earn more than 60% of the population combined together (Trading economics 13). It should be known that most of the country’s income rests in the hands of the middle class.
Ashley, Richard. Fact sheet on the impact of unemployment. 2007. Springer: Heidelberg.
Blades, Derek. Understanding National Accounts. 2006. London: Guardian.
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Ruhm, Christopher. Are Recessions Good for Your Health. 2000. New York: Routledge.
Sheffrin, Steven. Economics: Principles in action. 2003. New Jersey: Upper Saddle River.
Sudhir, Anand. Inequality and Poverty in Malaysia. 1983. New York: Oxford University Press.
Trading economics. United States GDP Growth rate. 2011. Web. 07 Jan. 2011. http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=USD
Wieseman, Ted. United States review and preview. 2011. Web. 07 Jan. 2011. http://www.morganstanley.com/views/gef/index.html