Economic Summary Report

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In 2017, the economy in the United States was in good shape. This assertion is supported by key economic measures. This is amid the country's economic problems, such as the destructive consequences of Hurricanes, among others. To assess the state of the economy, this paper will review the most recent economic data on the consumer price index, job situation report, gross domestic product, consumer trust index, and leading economic indicators index.

The consumer price index is a weighted average of the prices of consumer goods and services. When the CPI rises, it means that goods and services get more expensive, implying that there is inflation. When the CPI decreases, it implies that there is deflation and that there is a steady decrease in the prices of services and goods. In the August 2017 Consumer Price Index, all items index rose by 1.9 percent over the last 12 months (Department of Labor, 2017). This increase was larger as compared to the increase in CPI for 12 months ending July which was 1.7 percent. Gasoline and shelter indexes increased and accounted for almost all the seasonally adjusted rise in the all items index. This report shows a steady increase in the prices of goods and services.

An Employment Situation Report is a monthly report that monitors the labor market and reports on the unemployment rate and the number of workers unemployed as a percentage of the labor force. In the October 2017 Employment Situation Report, the unemployment rate dropped by 4.1 percent (Department of Labor, 2017). Employment in drinking and food places increased sharply offsetting the rise in unemployment in September. The high unemployment levels in the previous months were mainly because of the impact of Hurricanes Harvey and Irma. There were also job gains in business and professional services, healthcare and manufacturing industry. A decrease in unemployment levels reflects an economy that is expanding. The October Employment situation shows that the economy is doing much better in the aftermath of the Hurricane that had affected it. The unemployment rate is an economic indicator, and its reduction demonstrates that the economy is much better.

Gross Domestic Product is the best way to measure economy of a country accurately. It totals everything produced by companies and people in that country regardless if they are citizens or foreigners. In the second quarter, Real GDP increased by 3.1 percent while the real GDI increased by 2.9 percent (Bureau of Economic Analysis, 2017). Profits from the current production also increased, but domestic profits of financial corporations reduced. However, domestic profits of nonfinancial corporations increased. GDP can increase as a result of the growth of the economy, increase in the prices of services and goods and inflation. All the three factors may have contributed to the increase in GDP. Real GDI is interpreted as a measure of purchasing power rather than a measure of production. Since real GDI increased in the second quarter, it implies that there was no or low inflation. Real GDP is also not affected by changes in prices of products which implies that the increase in the GDP was as a result of growth in the economy.

Consumer confidence index is an indicator that measures the confidence of consumers towards the economy. It is the degree of confidence on the state of the economy that is expressed by consumers through spending and saving activities. When confidence is high, more purchases are made by the consumers. In October, the index increased to 125.9 up from 120.6 recorded in September (Conference Board, 2017). The CCI is at its highest level in almost seventeen years. The job market, present-day conditions, and business conditions received high confidence from the consumers. The CCI in October is an indicator that people have confidence in the economy and that the economy is doing well.

The Leading Economic Index is an indicator that is intended to predict future economic activity. LEI tries to forecast the state of the economy in the future. Negative readings of this indicator would most likely indicate a recession while positive readings will forecast growth in the economy. In October 2017, LEI increased by 1.2 percent which implies that the economy is headed for future growth (Conference Board, 2017).

The US economy is in a healthy state from the analysis of the economic reports listed above. Most of the reports proved otherwise as they showed or forecasted a healthy economy. The CPI increased by 1.9 percent which may be as a result of an increase in inflation rate. However, a modest inflation is considered better than deflation. The unemployment rate dropped by 4.1 percent while the real GDP increased by 3.1 percent. The CCI increased to 125.9, and it is at one of the highest levels in almost 17 years. LEI increased by 1.2 percent forecasting growth in the economy in the future. All the reports analyzed above prove that the economy is in a healthy state.

References

Bureau of Economic Analysis. (2017, September 28). Gross Domestic Product Second Quarter of 2017 (Third Estimate). Retrieved November 25, 2017, from https://www.bea.gov/newsreleases/national/gdp/2017/pdf/tech2q17_3rd.pdf

Conference Board. (2017, October 31). Consumer Confidence Index® | The Conference Board. Retrieved from https://www.conference-board.org/data/consumerconfidence.cfm

Conference Board. (2017, November 20). The Conference Board Leading Economic Index® (LEI) for the U.S. Increased | The Conference Board. Retrieved from https://www.conference-board.org/data/bcicountry.cfm?cid=1

Department of Labor. (2017, September 14). Consumer Price Index - August 2017. Retrieved November 25, 2017, from https://www.bls.gov/news.release/pdf/cpi.pdf

Department of Labor. (2017, November 3). The Employment Situation - October 2017. Retrieved November 25, 2017, from https://www.bls.gov/news.release/pdf/empsit.pdf

November 23, 2022
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