Applied Macroeconomics: Current Economic Climate in the United States

Applied Macroeconomics
Final Project
U.S.'s Current Economic Climate
The U.S. economy is not safe from the uncertainties surrounding the global economy. It has always been in a better place to tackle economic strains than other countries in its league and is a defender of fragile economies during torrid times. Covid-19 struck the U.S. economy early in 2020 and upended operationalization for almost all industries. When the most excellent economy on earth was recovering from the pandemic, Putin instructed his military to attack Ukraine late in February 2022 (Kirson et al., 2022). This has had immeasurable consequences on the various factors of the economy, such as the real output (GDP), labor market, prices, and monetary and physical policies.
Real output (GDP)
Real GDP refers to the overall value of goods and services produced by all U.S. resources while adjusted for inflation (Baratti, 2022). To put the effects of the Covid-19 pandemic into perspective, the data in figure 2 below from the U.S. Bureau of Economic Analysis visualizes that the U.S. has never experienced such a dive in real Gross Domestic Product since 1950. Not even during the infamous economic recession of 2008 (Couch et al., 2022). It isn't easy to imagine what might have happened to other countries that rely on the U.S. Still, the exact figure indicates recovery on the same parameter to a level above the pre-crisis level in 2021 and 2022.
Figure 1: US GDP trends since 1950
Source: U.S. Bureau of Economic Analysis
Notably, during the pandemic, many economic activities were disrupted, leading to a reduction in exports. Government expenditure increased after the lockdown to cushion businesses that had been affected by the pandemic. Just when the country wanted to resume normalcy, the Russian invasion of Ukraine happened to lead to disruption in the global supply chain. With Russia being a major supplier of oil across the world, it led to inflation of oil prices, which essentially has led to inflation of other commodities across the world (Smialek & Swanson, 2022). Inflation has cowed U.S. investors who want to protect their wealth from losing value, and more must be spent on productivity by U.S. industries. Therefore, profits for companies will be lower, and the U.S. will gain less taxation on businesses located within its soils (Baratti, 2022). Overall, economic experts project that US GDP will grow by just about 1.75% by the fourth quarter, which will be a sharp decline from the 5.8% increase realized in the fourth quarter of 2021 (Liadze et al., 2022).
Labor
When Covid-19 came, the U.S. rolled out a range of restrictions to contain its fast spread, and some of them required the closures of businesses and learning institutions. This meant job losses for people in the U.S. labor market, and The Economist reported that the unemployment levels jumped from 6.1 million to 20.6 million in just three months of the pandemic (Casarico & Lattanzio, 2022). Observers have variously said that although this did not get to the levels of The Great Recession of the 1930s, they are conveniently considerable. Some Americans were affected more than others, and according to Couch (2022), more women lost jobs than men. The reason is that women employees d...