Economic Cycle

In: Business and Management

Submitted By hussong1555
Words 427
Pages 2
All economies in the world operate in cycles of expansion and recession. Additionally, the world as a whole is an economy the runs in a cycle. Factors such as gross domestic product (GDP), interest rates, levels of employment and consumer spending can help to determine the current stage of the economic cycle. For the United States, the current part of the cycle of the economy is recovery. Recovery is the time when unemployment is going down and GDP is going up. Additionally, recovery is the early stage of expansion. Economic expansion is when the GDP begins to rapidly increase. It is during times of expansion the people tend to invest in new technology and capital goods. Economic indicators used to show that the U.S. in the early stages of expansion includes the inflation rate, unemployment rate, real GDP, and the federal funds rate. On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers rose 0.3 percent in March after rising 0.4 percent in February. The index for all items less food and energy rose 0.2 percent in March after increasing 0.1 percent in February. U.S. payroll employment rose by 115,000 in April and the unemployment rate has held steady at 8.1%. Employment increased in professional and business services, retail trade, and health care, but has declined in transportation and warehousing. This being said, the unemployment is still down from the 12% it was in May of 2010. Real GDP increased at an annual rate of 2.2 percent in the first quarter of 2012 according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2011, real GDP increased 3.0 percent. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Federal Reserve Committee expects to maintain a highly accommodative stance for monetary…...

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