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The Morning

What’s going on with the u.s. economy.

The economic picture is simpler than the swirl of economic indicators sometimes suggests.

By David Leonhardt

The economy is probably headed toward a recession. No, it’s actually booming again.

Inflation is plummeting. No, it has started rising again.

If you find the cacophony of economic indicators to be confusing, don’t feel bad. It is confusing. Some numbers point in one direction, while others point in the opposite. Partisans from both political parties have an interest in promoting one type of news and downplaying the other.

Yesterday’s inflation report added to the muddle. Inflation — a major concern for many families and already a 2024 campaign issue — has been falling for the past year and half. Americans’ economic mood has improved slightly as a result . But the numbers released yesterday showed inflation to be higher than forecasters had expected. In response, the S&P 500 index fell 1.4 percent , its second-biggest daily decline this year.

In today’s newsletter, I’ll give you a framework for thinking about the state of the U.S. economy by describing the four main phases of the past several years. I can’t tell you what will happen next, but I do think the picture is simpler than the swirl of economic indicators sometimes suggests.

1. The pre-Covid boom

The American economy has been disappointing for much of the past half-century. Income and wealth growth has been slow for most families, and inequality has soared. Perhaps the starkest sign of the problems: Life expectancy in the U.S. is now lower than in any other high-income country, and it isn’t especially close .

Still, there have been a few brief periods when the economy has boomed. One of them began late in Barack Obama’s presidency and continued during Donald Trump’s term. The country finally emerged from its hangover after the housing crash, as businesses expanded and consumers spent more.

The unemployment rate fell below 5 percent in 2016 and below 4 percent in 2018. The tight labor market — combined with increases in the minimum wage in many states — raised income for all income groups.

Change in median weekly income

Compared with two years earlier, adjusted for inflation

By early 2020, the U.S. economy’s short-term performance was as healthy as it had been since the dot-com boom two decades earlier.

2. The Covid crash

Then the pandemic arrived.

People stayed home and cut back on spending. Businesses laid off workers, and the unemployment rate exceeded 10 percent. Experts understandably worried that the economy could fall into a vicious cycle, in which companies went out of business, families couldn’t make loan payments and banks went under.

Many economists believed that the federal government had been too timid with stimulus after the early-2000s housing crash. During the pandemic, members of Congress vowed not to repeat the mistake and passed huge stimulus bills, which both Trump and President Biden signed.

3. The too-hot recovery

Those stimulus programs worked — a bit too well.

For all the misery that Covid caused, it ended up being less economically destructive than the housing crash. The unemployment surge was temporary. And thanks to the stimulus, the typical American family’s finances improved during the pandemic — a very different situation than the aftermath of the housing crash.

In effect, Washington overlearned the lesson of the previous crisis. It pumped so much money into the economy during the pandemic that families were able to go on a spending spree. Businesses, in response, raised prices.

The pandemic’s supply-chain disruptions played a big role, too. This combination — high demand and low supply — led to sharp price increases.

Year-over-year change in Consumer Price Index

excluding food

in Jan. 2024

4. The healthier recovery

Once inflation rises, it can remain high for years (as it did from the late 1960s to the early 1980s). Workers demand bigger raises, and businesses, facing higher costs, raise prices even more. The dynamic is reinforcing.

When inflation soared in 2021, some economists thought the pattern was repeating. They predicted that only a deep recession would bring a return to normalcy. These dark predictions turned out to be wrong , though. Instead, inflation started falling rapidly in 2022. The end of the stimulus programs, combined with the end of most supply-chain problems, was enough to reduce price increases.

For the past several months, the economy has again looked healthy, with both employment and wages growing nicely. Yesterday’s report doesn’t change that: Annual inflation fell to 3.1 percent in January, from 3.4 percent in December. It’s just that forecasters had expected it to fall more than it did.

Why didn’t it? Maybe last month’s number was just a statistical blip. But maybe it is a sign that the economy has again become too strong for inflation to keep falling.

“Hiring picked up in January, wage growth was solid, and consumers continue to spend,” as my colleague Jeanna Smialek explains. “Some analysts have suggested that in an economy this hot, wrestling inflation the rest of the way to normal will prove more difficult than the progress so far.” Economists generally consider the ideal inflation rate to be around 2 percent.

By almost any measure, the economy is in better shape today than most forecasters predicted even a year ago. Still, it hasn’t fully recovered from the pandemic.

Related: The American economy has seen a burst of productivity recently. Read more about economists’ views on whether it will continue.

THE LATEST NEWS

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House Republicans impeached Alejandro Mayorkas , Biden’s homeland security secretary, despite no evidence that he had committed impeachable offenses.

He is the first sitting cabinet member to be impeached. Read what could happen next .

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Tom Suozzi, a Democratic former congressman, won a special House election to replace George Santos in a Queens and Long Island district. Suozzi’s strategy offers a playbook for other Democrats .

Biden criticized Trump for suggesting that he would let Russia attack NATO countries that don’t spend enough on defense. “It’s dumb, it’s shameful, it’s dangerous, it’s un-American,” Biden said.

Biden urged Speaker Mike Johnson to let the House vote on a bill to aid Ukraine and Israel. If Johnson refuses, House members may use a procedural trick — a discharge petition — to go around him.

Defense Secretary Lloyd Austin has been released from hospital after his admission for a bladder issue.

A diamond ring and a “James Bond” phone: Court filings revealed new details in Senator Robert Menendez’s bribery case .

Top Senate Republicans endorsed Kari Lake for Senate in Arizona. Lake refused to admit her loss in the state’s 2022 governor’s race.

Israel-Hamas War

Arab governments are privately discussing a new vision for governing Gaza, according to a senior adviser . Their idea includes an independent Palestinian leader and an Arab peacekeeping force.

Negotiations in Cairo over a pause in fighting in Gaza have been extended by three days, according to Egyptian officials.

Hezbollah fired missiles into northern Israel , injuring at least two people.

Two Michigan students have opposing views on the war. Read about their civil, if awkward, conversation on campus .

After a crackdown on drunken driving, motorbikes are filling impound lots in Vietnam.

A South Korean court found three former police officers guilty of destroying evidence tied to a Halloween crowd crush that killed nearly 160 people in Seoul in 2022.

Two major parties in Pakistan agreed to form a coalition government. They withheld power from candidates aligned with former Prime Minister Imran Khan, even though his allies recently won the most seats.

Myanmar’s junta said it would impose a military draft to replenish forces that have been depleted fighting pro-democracy rebels.

China, faced with declining foreign investment, is trying to soften its image abroad. One Communist Party official has played a prominent role.

Other Big Stories

The East Coast is sinking , research has found. A major culprit: overpumping of groundwater.

Better memory: OpenAI is releasing a new version of ChatGPT . It will store what users write and apply the information to future chats.

A vehicle crashed into a hospital emergency room in Austin, Texas, killing at least one person and injuring five others.

As artificial intelligence takes over technical tasks, the human side of work — collaboration, empathy, communication — will become more valuable , Aneesh Raman and Maria Flynn argue.

Don’t buy flowers for your valentine . There are more environmentally friendly ways to show love, Margaret Renkl says.

Here are columns by Ross Douthat on inflation and Thomas Edsall on isolationism .

MORNING READS

Anti-Valentine’s Day: Single, anti-consumerist or just not a romantic? There’s a market for you, too .

Small acts: Times readers shared the little things they do to show affection all year long.

Your brain on love: Roses are red, violets are blue. This is how romance can mess with you .

Modern Love podcast: Hear how a couple navigated getting “un-married” while staying together .

New gig: Grover, the furry blue Muppet from “Sesame Street,” is becoming a reporter. Journalists aren’t optimistic .

Lives Lived: Bob Moore leveraged his grandfatherly image to turn the artisanal grain company Bob’s Red Mill into a $100 million-a-year business. He died at 94 .

N.F.L. draft: Read about the top 100 prospects in this year’s class.

N.B.A.: The Knicks are said to be filing a protest to dispute their 105-103 loss to the Rockets .

No. 32: The Orlando Magic retired Shaquille O’Neal’s jersey , making him the second player in N.B.A. history to have a jersey retired by three different franchises.

ARTS AND IDEAS

The closer: When the comedian Taylor Tomlinson began her tour, she was happy with everything in her set except for her closing joke. So, over months of live shows, she refined it, adding punchlines and tweaking details. A new story by the Times comedy critic Jason Zinoman follows her through the process, showing how small changes led to big laughs .

More on culture

Meghan Markle has found a new podcast partner . Markle and Prince Harry’s deal with Spotify ended after they delivered just one show, Variety reports.

The creators of “Six,” about the six wives of Henry VIII, announced that their second musical , “Why Am I So Single?,” will premiere in London in August.

Paramount, which owns Nickelodeon and MTV, is laying off hundreds of employees as it moves away from traditional television.

Late-night hosts discussed Trump recommending Lara Trump for co-chair of the R.N.C.

THE MORNING RECOMMENDS …

Combine just a few ingredients to make a simple, romantic spaghetti carbonara .

Listen to love songs about crushes .

Shop more sustainably .

Clean your blankets .

Here is today’s Spelling Bee . Yesterday’s pangrams were applicable and clippable .

Celebrate Valentine’s Day with this month’s bonus crossword puzzle , which has a rom-com theme.

And here are today’s Mini Crossword , Wordle , Sudoku and Connections .

Thanks for spending part of your morning with The Times. See you tomorrow. — David

Sign up here to get this newsletter in your inbox . Reach our team at [email protected] .

David Leonhardt runs The Morning , The Times’s flagship daily newsletter. Since joining The Times in 1999, he has been an economics columnist, opinion columnist, head of the Washington bureau and founding editor of the Upshot section, among other roles. More about David Leonhardt

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How is the US economy doing?

Us gross domestic product (gdp) increased 1.9% in 2022 and another 2.5% in 2023..

GDP reached $27.4 trillion in 2023. The increase in real GDP (or GDP adjusted for inflation) was primarily due to increased consumer spending, nonresidential fixed investment, government spending, and exports.

Year-over-year inflation — the rate at which consumer prices increase — was 3.1% in January 2023.

That’s down from June 2022’s rate of 9.1%, the largest 12-month increase in 40 years. Shelter was the largest contributor to monthly inflation growth for most of 2023. Gasoline was the largest contributor in August.

The Federal Reserve raised interest rates seven times in 2022 and four times in 2023. It raised the target rate to between 5.25% to 5.50% in late July 2023 and has left rates unchanged since then.

Rate increases make it more expensive for banks to borrow from each other. Banks pass these costs on to consumers through higher interest rates. (Read more about how the Federal Reserve tries to control inflation here .)

Workers’ average hourly earnings were up 4% in December 2023 compared to a year prior. However, when accounting for inflation, it was less than 1%.

Inflation-adjusted average hourly earnings rose in all private industries (which excludes government employees) except in education and health services, where earnings decreased by 1 cent.

The ratio of unemployed people to job openings hit a record low in 2022 but trended upward in 2023. The 2023 average of 0.64 unemployed people per opening was 0.11 higher than in 2022.

However, there was fewer than one unemployed worker for every open job throughout 2023. The ratio was lower than any other year prior to the pandemic for which there is data.

The unemployment rate was 3.4% at the beginning of 2023 and 3.7% by the end.

It increased 0.3 percentage points for white and Hispanic people, decreased by 0.1 for Black people, and remained unchanged for Asian people. Black and Hispanic people continue to have unemployment rates higher than the national average.

The labor force participation rate was 62.5% in January 2024, up 0.1 percentage points over January 2023.

Although participation increased last year, the Bureau of Labor Statistics projects it will decline over the next decade due to the aging population .

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Last year, the US continued to import more than it exported; however, the trade deficit fell 22% from $990.3 billion in 2022 to $773.4 billion.

According to preliminary data , the US imported more goods and services from Mexico than China for the first time in 20 years.

Continue exploring the State of the Union

How much does the government spend and where does the money go​ how does this affect the national debt.

Standard of Living

How is the American middle class doing? What support does the government provide people?

Explore more of usafacts, related articles, how much money do banks in the us control, which countries does the us trade with, what is labor productivity, and how has it changed in the us over time, what role do small businesses play in the economy, related data, gross domestic product.

$27.36 trillion

Federal minimum wage

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What to know about the report on America’s COVID-hit GDP

Some of the deepest contractions on record. Image:  REUTERS/Keith Bedford

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Stay up to date:, united states.

• The COVID-19 pandemic has caused the biggest blow to the US economy since the Great Depression.
• GDP fell at a 32.9% annualized rate, the deepest decline since records began back in 1947.
• 30.2 million Americans were receiving unemployment checks in the week ending July 11.

The U.S. economy suffered its biggest blow since the Great Depression in the second quarter as the COVID-19 pandemic shattered consumer and business spending, and a nascent recovery is under threat from a resurgence in new cases of coronavirus.

The bulk of the deepest contraction in at least 73 years reported by the Commerce Department on 30th July occurred in April when activity almost ground to an abrupt halt after restaurants, bars and factories among others were shuttered in mid-March to slow the spread of coronavirus.

Have you read?

Record number of black women set to run for u.s. congress, 5 facts about how covid-19 is affecting unemployment in the u.s..

More than five years of growth have been wiped out. With the recovery faltering, pressure is mounting for the White House and Congress to agree on a second stimulus package. President Donald Trump, who is trailing Democratic challenger and former Vice President Joe Biden in opinion polls, said on Wednesday he was in no hurry. Trump on 30th of July raised the possibility of delaying the Nov. 3 presidential election.

“This is hard to swallow,” said Jason Reed, finance professor at the University of Notre Dame’s Mendoza College of Business. “Right now, the American economy is speeding toward a fiscal cliff. Not only do we need Americans to take serious action preventing the spread of the disease, but we also need Congress to agree on another stimulus package and quickly.”

Gross domestic product collapsed at a 32.9% annualized rate last quarter, the deepest decline in output since the government started keeping records in 1947. The drop in GDP was more than triple the previous all-time decline of 10% in the second quarter of 1958. The economy contracted at a 5.0% pace in the first quarter. It fell into recession in February.

Economists polled by Reuters had forecast GDP slumping at a 34.1% rate in the April-June quarter.

On a year-on-year basis GDP fell a record 9.5% last quarter. Output shrank 10.6% in the first half. The level of GDP has dropped to levels last seen in the last quarter of 2014.

Though activity picked up starting in May, momentum has slowed amid the explosion of COVID-19 infections, especially in the densely populated South and West regions where authorities in hard-hit areas are closing businesses again and pausing reopenings. That has tempered hopes of a sharp rebound in growth in the third quarter.

Federal Reserve Chair Jerome Powell on Wednesday acknowledged the slowdown in activity. The U.S. central bank kept interest rates near zero and pledged to continue pumping money into the economy.

Trump’s campaign shrugged off the GDP slump, saying the economy was “rebounding.” Biden blamed a leadership “failure,” and urged “a massive public health response to save lives and get our economy back up to speed.” Stocks on Wall Street fell. The dollar dipped against a basket of currencies. U.S. Treasury prices rose.

Broad historic declines

Economists say without the historic fiscal package of nearly $3 trillion, the economic contraction would have been deeper. The package offered companies help paying wages and gave millions of unemployed Americans a weekly $600 supplement, which expires on Friday. Many companies have exhausted their loans.

This, together with the sky-rocketing coronavirus infections is keeping layoffs elevated. In a separate report on Thursday, the Labor Department said initial claims for unemployment benefits increased 12,000 to a seasonally adjusted 1.434 million in the week ending July 25. A staggering 30.2 million Americans were receiving unemployment checks in the week ending July 11.

“Tens of millions of workers have lost their jobs over the past few months and remain unemployed, and the pace of improvement in the labor market has slowed,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh.

“These $600 payments are adding about $75 billion per month to household income, at a time when income from work has plummeted. The loss of huge amounts of unemployment income in the near term would be a significant drag on consumer spending.”

There have been claims, mostly from Republicans, that the generous jobless benefits are discouraging some of the unemployed from looking for work. The GDP report showed income at the disposal of households surged $1.53 trillion in the second quarter compared to an increase of $157.8 billion in the January-March period.

A significant portion of the income was stashed away, boosting savings to $4.69 trillion from $1.59 trillion in the first quarter. Consumer spending, which accounts for more than two-thirds of the U.S. economy, plunged at a 34.6% pace last quarter.

Business investment tumbled at a 27% rate. It was pulled down by spending on equipment, which collapsed at a 37.7% rate. Investment is equipment has now contracted for five straight quarters. Boeing reported a bigger-than-expected quarterly loss on Wednesday and slashed production on its widebody programs.

The pandemic has also crushed oil prices, leading to deep cuts in shale oil production and layoffs. Spending on nonresidential structures such as mining exploration, shafts and wells plunged at a record 34.9% rate.

Investment in homebuilding tumbled at a 38.7% rate. Government spending rose, though state and local government outlays fell. Trade added to GDP, but inventories were a drag.

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The U.S. Economy Essay

The U.S. economy faces many challenges given the fact that it is recovering from a financial crisis. Virtually every sector of the economy was affected by the 2009 financial crisis. Economic growth slowed down while unemployment rates increased. It is important to note that these conditions have not changed much.

High rates of unemployment are still being reported in the U.S. During the financial crisis, the American economy shrunk and approximately 9 million jobs were lost. The unemployment rates have been alarming especially from 2009. The unemployment rate was 5% in 2008 but rose during the financial crisis to 10%. Though they have declined to around 7.8% as of 2012, much has to be done because the number of people unemployed is still high (Lewis, 2013).

It is paramount to note that despite the recovery that is being recorded in various sectors of the American economy, the figures are still very low compared to the drop that took place. On the same note, there are still the unpaid, and almost certainly impossible to pay, house mortgages which caused the 2009 financial crisis.

Similarly, the euro crisis is likely to spill over to other parts of the world and America’s financial system is at risk. On the same note, there is reduction in spending due to the cut in government expenditure which is slowing down economic growth. All these factors are raising eye brows among economists because they form a perfect recipe for another economic crisis (Krugman, 2012).

In conditions like the one America is in right now, choice of policy is quite vital to boost the economy. It has been stated that the economy is recovering but not as expected. In order to strengthen economic growth and job creation, private spending should be improved through increasing disposable income. To achieve this, expansionary monetary policy is essential.

The FOMC had reduced interest rates during the financial crisis to improve the public’s access to money. Maintaining the interest rates low will go a long way in ensuring ease access of credit and thus boost spending. On the same note, the FOMC can also buy more treasury bills to increase the amount of money in circulation (Lewis, 2013).

On the other hand, public spending will also be crucial in increasing aggregate consumption. Though the federal government has proposed tax cuts to increase disposable income as well as private spending, government expenditure is still low.

The policy that was implemented to reduce federal, state and local government spending is still in force (Lewis, 2013). To help the situation, the government needs to implement an expansionary fiscal policy that will not only encourage tax cuts, but also increased government spending at all levels.

Krugman, P. (2012). The Conscience of a Liberal. The New York Times . Web.

Lewis, P. (2013). Family and Business Tax Cut Certainty Act of 2012 . Munchen: GRIN Verlag.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2023, December 21). The U.S. Economy. https://ivypanda.com/essays/the-u-s-economy/

"The U.S. Economy." IvyPanda , 21 Dec. 2023, ivypanda.com/essays/the-u-s-economy/.

IvyPanda . (2023) 'The U.S. Economy'. 21 December.

IvyPanda . 2023. "The U.S. Economy." December 21, 2023. https://ivypanda.com/essays/the-u-s-economy/.

1. IvyPanda . "The U.S. Economy." December 21, 2023. https://ivypanda.com/essays/the-u-s-economy/.

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IvyPanda . "The U.S. Economy." December 21, 2023. https://ivypanda.com/essays/the-u-s-economy/.

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Americans More Upbeat on the Economy; Biden’s Job Rating Remains Very Low

1. views of the nation’s economy, table of contents.

• The economy, past and future; top concerns
• Biden’s job performance, personal traits
• Other findings on partisan compromise and the House GOP impeachment inquiry
• Why do Americans rate the nation’s economy as they do?
• Cost of goods, housing remain top economic concerns
• Partisans’ views of Biden’s personal characteristics
• Perceptions of Biden over time
• Biden’s job approval ratings
• Biden’s presidency in the long run
• Acknowledgments
• The American Trends Panel survey methodology

About three-in-ten Americans (28%) currently rate national economic conditions as excellent or good, while a similar share (31%) say they are poor and about four-in-ten (41%) view them as “only fair.”

While ratings remain substantially lower than they were prior to the start of the COVID-19 pandemic , they are more positive than they were last spring – when just 19% viewed the economy in positive terms.

Expectations for future economic conditions are also more positive than they were last spring: Today, roughly a quarter say that they expect economic conditions will be better a year from now (26%) – up from 17% in April 2023.

At the same time, the share who says conditions will be worse has declined by 13 percentage points. About four-in-ten say they expect conditions will be about the same.

As has long been the case , partisans who share the party of the president have more positive views of economic conditions than those who support the opposing party. Today, 44% of Democrats and Democratic leaners say the nation’s economy is excellent or good. This compares with 13% of Republicans and GOP leaners.

Similarly, Democrats are more likely than Republicans to say they expect economic conditions a year from now will be better than they are today: 34% of Democrats say this, compared with 20% of Republicans.

There are substantial differences among Democrats in views of the nation’s economy – particularly by age and income.

Younger Democrats are much less likely than older Democrats to view current economic conditions in positive terms. Among Democrats under 30, a quarter view the economy positively. This share rises to 34% among those ages 30 to 49, 56% among those 50 to 64, and 70% among those 65 and older.

There are also significant differences by race and ethnicity. White Democrats are more likely than Black, Hispanic and Asian Democrats to say the economy is excellent or good.

Democrats in different income groups also diverge in their evaluations of the nation’s economy. Democrats with higher household incomes are more positive about economic conditions than Democrats with lower incomes. A clear majority of upper-income Democrats (60%) say the economy is doing excellent or good. By comparison, 32% of those with lower incomes view the economy positively, while a majority say it is only fair (40%) or poor (28%).

Across Republican groups, economic assessments vary less drastically. Republicans overwhelmingly rate the economy negatively: Just 15% or less across demographic groups say national economic conditions are good or excellent.

However, there are some differences in how negative GOP assessments are. For instance, upper-income Republicans are more likely to say the economy is doing only fair (48%) rather than poorly (36%), while lower-income Republicans are more likely to say poor (49%) rather than only fair (38%).

In an open-ended question which asked Americans to explain the reasons for their overall evaluation of the nation’s economy (as excellent, good, only fair, or poor), people provide wide-ranging answers.

Among the 28% of Americans who say the nation’s economy is doing excellent or good, many offer overwhelmingly positive reasons for why they rate the economy this way. A large share (43%) note the country’s low unemployment, while 18% say that inflation is coming down or is lower than it has been in recent months. Roughly one-in-ten mention wage growth, while a similar share (9%) say strong stock market performance contributes to their rating. And 5% say the reason for their rating is that the U.S. is outperforming expectations or otherwise doing better than other countries in terms of economic growth.

Among the 72% of adults who say the economy is doing only fair or poor, most offer negative reasons for why they rate the economy the way they do. Those who say the economy is only fair are slightly more likely to offer a mix of positive and negative responses than those who say the economy is poor . However, respondents in both groups offer similar reasons for their ratings.

Among those who say the nation’s economy is only fair or poor, high inflation or high costs of various goods are frequently mentioned: 28% say high inflation is a main reason they evaluate the economy as only fair or poor, while roughly two-in-ten cite the high cost of living. Along this same theme, 6% point to the high cost of food and groceries while identical shares say the high cost of housing and high interest rates are a main reason they view the economy as doing only fair or poor.

Other issues are also mentioned: 15% say the lack of good paying jobs or low wages is a major reason for their rating while 7% point to the national debt and government spending. Another 5% give a negative response about Biden’s or Democrats’ economic policies more broadly.

Majorities of Americans continue to express a high level of concern about the price of food and consumer goods (72% say they are very concerned about this) and the cost of housing (64%). About half (51%) say they are very concerned about the price of gasoline and energy. More than eight-in-ten say they are at least somewhat concerned about each of these economic issues.

Other economic issues rank lower on the public’s list of concerns. Smaller shares of Americans say they are very concerned about the stability of banks and financial institutions (27%), people who want to work being unable to find jobs (31%) or the performance of the stock market (18%).

Majorities in both parties are very concerned about the cost of goods and housing

Republicans and Democrats are fairly aligned in their economic concerns. Majorities in both groups say they are very concerned about the cost of food, consumer goods and housing. And substantially smaller shares express concern about the stability of banks or the performance of the stock market.

However, Republican concern about the price of food and consumer goods is more widespread than Democratic concern (82% vs. 63%). And the partisan gap on concerns about the price of gasoline and energy is even wider: A 64% majority of Republicans say they are very concerned about the cost of gas, compared with 40% of Democrats.

Partisans’ expectations for the year ahead

As has been the case for the last three years , Democrats are more likely than Republicans to say the upcoming year will be better than the last. Two-thirds of Democrats say 2024 will be better than 2023, while 43% of Republicans say the same.

This dynamic in feelings about the new year – with Democrats expressing more optimism than Republicans – has held true since 2021. Then, 83% of Democrats said 2021 would be better than 2020 while 48% of Republicans agreed. In 2020, the pattern was the reverse. Republicans were more likely to say 2020 would be better than 2019 compared with Democrats (78% vs. 36%, respectively).

In Pew Research Center surveys dating back to 2006 (when the question was first asked), Americans who identify with or lean toward the president’s party have tended to be more optimistic about the coming year than those who associate with the opposing party.

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U.S. Economy at a Glance

Perspective from the bea accounts.

BEA produces some of the most closely watched economic statistics that influence decisions of government officials, business people, and individuals. These statistics provide a comprehensive, up-to-date picture of the U.S. economy. The data on this page are drawn from featured BEA economic accounts.

National Economic Accounts

Gross domestic product, first quarter 2024 (advance estimate).

Real gross domestic product (GDP) increased at an annual rate of 1.6 percent in the first quarter of 2024, according to the “advance” estimate. In the fourth quarter of 2023, real GDP increased 3.4 percent. The increase in the first quarter primarily reflected increases in consumer spending and housing investment that were partly offset by a decrease in inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.

• Current release:  April 25, 2024
• Next release:  May 30, 2024

Gross Domestic Product, First Quarter 2024 (Advance Estimate) CHART - HP

Personal Income and Outlays, March 2024

Personal income increased $122.0 billion (0.5 percent at a monthly rate) in March. Disposable personal income (DPI)—personal income less personal current taxes—increased $104.0 billion (0.5 percent). Personal outlays—the sum of personal consumption expenditures (PCE), personal interest payments, and personal current transfer payments—increased $172.1 billion (0.9 percent) and consumer spending increased $160.9 billion (0.8 percent). Personal saving was $671.0 billion and the personal saving rate—personal saving as a percentage of disposable personal income—was 3.2 percent in March.

• Current release:  April 26, 2024
• Next release:  May 31, 2024

Personal Income and Outlays, March 2024 CHART

Industry Economic Accounts

International economic accounts, u.s. international transactions, 4th quarter and year 2023.

The U.S. current-account deficit narrowed by $1.6 billion, or 0.8 percent, to $194.8 billion in the fourth quarter of 2023, according to statistics released today by the U.S. Bureau of Economic Analysis. The revised third-quarter deficit was $196.4 billion. The fourth-quarter deficit was 2.8 percent of current-dollar gross domestic product, down less than 0.1 percent from the third quarter.

• Current Release:  March 21, 2024
• Next Release:  June 20, 2024

U.S. International Transactions 4th Quarter, '23 Chart 1

U.S. International Investment Position, 4th Quarter and Year 2023

The U.S. net international investment position, the difference between U.S. residents’ foreign financial assets and liabilities, was -$19.77 trillion at the end of the fourth quarter of 2023, according to statistics released today by the U.S. Bureau of Economic Analysis (BEA). Assets totaled $34.54 trillion, and liabilities were $54.31 trillion. At the end of the third quarter, the net investment position was -$18.11 trillion (revised).

• Current Release:  March 27, 2024
• Next Release:  June 26, 2024

U.S. International Investment Position, 4th Quarter and year '23 CHART

U.S. International Trade in Goods and Services, March 2024

The U.S. goods and services trade deficit decreased in March 2024 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $69.5 billion in February (revised) to $69.4 billion in March, as imports decreased more than exports. The goods deficit increased $0.8 billion in March to $92.5 billion. The services surplus increased $0.9 billion in March to $23.1 billion.

• Current Release:  May 2, 2024
• Next release:  June 6, 2024

U.S. International Trade in Goods and Services, March 2024 CHART

New Foreign Direct Investment in the United States, 2022

Expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $177.5 billion in 2022, down $185.1 billion from $362.6 billion in 2021.

• Current release:  July 10, 2023
• Next release:  July 2024

New Foreign Direct Investment Expenditures by Type, '99-'22 Chart

Regional Economic Accounts

Gross domestic product by state and personal income by state, 4th quarter 2023 and preliminary 2023.

Real gross domestic product (GDP) increased in all 50 states and the District of Columbia in the fourth quarter of 2023, with the percent change ranging from 6.7 percent in Nevada to 0.2 percent in Nebraska

• Current Release:  March 29, 2024
• Next Release:  June 28, 2024

Gross Domestic Product by State and Personal Income by State, 4th Quarter '23 and Preliminary '23 - CHART

Personal Income by County and Metropolitan Area, 2022

In 2022, personal income, in current dollars, increased in 1,964 counties, decreased in 1,107, and was unchanged in 43. Personal income increased 2.1 percent in the metropolitan portion of the United States and 1.3 percent in the nonmetropolitan portion.

• Current Release:  November 16, 2023
• Next Release:  November 14, 2024

Personal Income by County and Metropolitan Area, 2022 CHART

Personal Consumption Expenditures by State, 2022

Nationally, personal consumption expenditures (PCE), in current dollars, increased 9.2 percent in 2022 after increasing 12.9 percent in 2021. PCE increased in all 50 states and the District of Columbia, with the percent change ranging from 11.8 percent in Idaho to 6.4 percent in Louisiana.

• Current Release: October 4, 2023
• Next release: October 3, 2024

Personal Consumption Expenditures by State: Percent Change, '21-'22

U.S. Department of the Treasury

The u.s. economy in global context.

Eric Van Nostrand , Assistant Secretary for Economic Policy (P.D.O.)

Tara Sinclair , Deputy Assistant Secretary for Macroeconomics

The U.S. economy in 2023 outperformed expectations along three key dimensions: growing economic output, labor market resilience, and slowing inflation. This month, the IMF released its latest World Economic Outlook (WEO), which provides an important occasion to consider U.S. economic performance in the context of the global outlook. The progress we have made on growth, labor markets, and inflation stands out across the globe, and remains an important source of strength for the global economy.  

The resilience of the entire global economy is a testament to the international cooperation and policy coordination that continues to help us recover from the pandemic. In particular, the U.S. policy environment is a clear contributor to U.S. economic performance. The Biden Administration’s focus on supply-side measures via the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act is working to expand our productive capacity to create space for faster growth without stoking inflation. Indeed, the October 2023 WEO attributes the improved global outlook partly to the strength of the United States economy. Our supply-side investments are not just bolstering the U.S. economy but supporting the global economic outlook as well. 

We offer three key conclusions:

• The United States has seen a particularly strong GDP recovery and is on track this year to reach the level that would have been predicted by the pre-pandemic trend.
• Global labor markets continue to strengthen, and the United States has been especially resilient.
• U.S. inflation has cooled sooner and more quickly than in other advanced economies.

Advanced economies faced different shocks and challenges than the United States. Economies heavily dependent on Russian energy imports were hit hardest by the war in Ukraine with steeper increases in energy prices and a sharper slowdown. As the WEO notes, the euro area suffered an adverse terms-of-trade shock in part due to the energy shock. The WEO also cites analysis showing that the pass-through effects from energy shocks associated with external factors have been a larger driver of core inflation in Europe than in the U.S. Consequently, comparisons across diverse economies must be done carefully. Indeed, many foreign advanced economies have similarly surprised forecasters to the upside. And many risks to the U.S. outlook remain, including tighter credit, persistent uncertainty over government funding, and ongoing autoworker strikes. But across growth, labor, and inflation, the United States’ resilience remains an important source of global economic strength.

 Strong U.S. GDP Recovery

The global recovery has been slow and uneven with considerable divergence across countries. In most advanced economies, real GDP has risen above pre-pandemic levels. U.S. real GDP surpassed its pre-pandemic level in the first quarter of 2021 and is now 6.1 percent higher than in Q4 2019. 

Partly due to the divergent shocks noted above, real GDP recovery has been quicker in energy- exporting countries (U.S. and Canada) than in energy-importing countries (remaining countries in the figure). 

Even today, most advanced economies are below the trend growth path that they were on before the pandemic – except the United States, which is on track this year to return to reach the level that would have been predicted by the pre-pandemic trend. None of the large advanced economies in our sample have reached the level of GDP they would have today if pre-pandemic trends persisted.    But given its quicker return to trend growth, the United States is the closest, real output is only 1.4% lower than if pre-pandemic trends persisted. 

Labor Markets Remain Resilient

Differences in national labor policies can make unemployment rate comparisons across economics especially difficult. But even so, COVID-era unemployment statistics show significant divergence across the G7. The United States and Canada experienced high spikes in their unemployment rates in April and May of 2020 and supported workers through supplemental unemployment insurance, while several European economies with workshare schemes saw declines in their unemployment rates.  

However, after the COVID shock the U.S. unemployment rate rapidly improved and has been consistently below 4 percent since January 2022. Amid the most rapid monetary tightening cycle since the 1980s and an increasing labor force participation rate, the jobs market in the United States remains strong with a current unemployment rate of 3.8 percent. 

Although many other advanced economies have higher unemployment rates than the United States, they are also showing resilience. In August, the euro area unemployment rate returned to its record low of 6.4%.  

Inflation is Gradually Nearing Target

U.S. core CPI inflation (excluding food and energy) has declined significantly over the last 12 months. Cross-country comparisons, however, are not simple because countries have different standards as to what is included in their inflation consumption baskets—most notably regarding owners’ equivalent rent (OER, or the rental value of housing services received by homeowners).  Whereas the United States includes OER in its CPI measure, European inflation statistics do not. Using the core measure of the Harmonized Index of Consumer Prices—excluding food, energy, and OER—enables cross-country comparisons.

Elevated inflation has been a phenomenon among most industrialized nations. Although inflation in the United States rose earlier than in other G7 economies—reflecting the brisk recovery from the pandemic—it also fell sooner and quicker. Indeed, once we exclude owners’ equivalent rent to make U.S. core inflation comparable to other countries, the U.S. harmonized core inflation is now about 2 percent—well below many other large advanced economies. [1]   Some of the differential relative to European economies is due to Russia’s invasion of Ukraine, which raised food and energy prices substantially with some passing through to core inflation. Even despite this challenge, these economies have shown some signs of disinflation recently—welcome trends for their near- and medium-run outlooks. 

Conclusion: Improving Near-Term Outlook

Stronger-than-expected U.S. growth continues to drive surprises to the upside in global growth in 2023, and the IMF notes that the likelihood of a hard landing has receded and the downside risks from last spring have moderated. While important risks for the U.S. economy remain, the progress we have made underscores the value of a swift and growth-oriented policy response while making important investments in our economy’s long-run productive capacity.

[1] Including OER raises the U.S. core inflation rate to 4.1 percent in September 2023, but the broad international comparison conclusions hold when we use individual country-preferred measures. 

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Policy has tightened a lot. how tight is it (an update).

May 7, 2024

Over the past few years, I have published a series of essays assessing where we are in our inflation fight and highlighting some important questions policymakers are facing. My most recent essay was in February of this year, where I questioned how much monetary policy was actually restraining demand. This essay is an update to that commentary, and I now examine the current stance of monetary policy in more detail. 1

I will argue that the Federal Open Market Committee (FOMC) has tightened policy significantly, compared with prior cycles, both in absolute terms and relative to the market’s understanding of neutral. But I will also observe that the housing market is proving more resilient to that tight policy than it generally has in the past. Given that housing is a key channel through which monetary policy affects the economy, its resilience raises questions about whether policymakers and the market are misperceiving neutral, at least in the near term. It is possible that once the reopening dynamics of the post-COVID economy have concluded, the macro forces that drove the low-rate environment that existed before the pandemic will reemerge, pulling neutral back down. But the FOMC must set policy based on where neutral is in the short run to achieve our dual mandate goals in a reasonable period of time. The uncertainty about where neutral is today creates a challenge for policymakers.

Economic Update

Since my last update in February, two significant economic developments have occurred simultaneously: Inflation appears to have stopped falling and economic activity has proven resilient, continuing the robust activity we saw in the latter half of 2023.

The FOMC targets 12-month headline inflation of 2 percent. While we saw rapid disinflation in the second half of 2023, that progress appears to have stalled in the most recent quarter (see Figure 1). The question we now face is whether the disinflationary process is in fact still underway, merely taking longer than expected, or if inflation is instead settling to around a 3 percent level, suggesting that the FOMC has more work to do to achieve our dual mandate goals.

During this time, economic activity has continued to show remarkable strength, as shown in Figure 2. While the most recent headline GDP appears somewhat weaker than prior quarters, that slowdown was driven largely by inventories and net exports. Underlying domestic demand remained strong.

The labor market, the other half of our dual mandate, has also remained strong with the unemployment rate at a historically low 3.9 percent.

Policy Is Much Tighter than the Pre-pandemic Period

In prior essays I wrote that the single best proxy for the overall stance of monetary policy is the long-term real rate, specifically the 10-year Treasury inflation-protected securities (TIPS) yield. Focusing on a long-term rate incorporates the expected path of both the federal funds rate and balance sheet, not just the current level of the federal funds rate. Moreover, it adjusts the expected path of policy by expected future inflation—the relevant comparison—rather than by recently realized inflation.

As I noted in earlier essays, prior to the pandemic the 10-year real yield was about zero, which I estimate was roughly a neutral policy stance at that time. In response to the pandemic, the FOMC acted aggressively to support the economy by driving the federal funds rate to the effective lower bound and massively expanding our balance sheet. Those combined effects drove the 10-year real yield to roughly -1 percent, as shown in Figure 3. Since we began our tightening cycle two years ago, 10-year real yields have more than fully retraced their pandemic decline and are now around 2.2 percent. Thus, we are clearly in a tighter stance now than immediately before the pandemic.

This Tightening Cycle Appears to Be as Aggressive as the 1994 Cycle

Data from the TIPS market only go back 20 years or so; thus, to evaluate earlier tightening cycles one must make a number of assumptions about the neutral rate and about inflation expectations.

I do not think comparisons to the 1970s and early 1980s are particularly relevant to us today because in those decades, the FOMC had to establish its inflation-fighting credibility, so the required monetary tightening was very large.

The tightening cycle in 1994 might be a better benchmark because at that time, as is true now, the FOMC had a lot of credibility with the public. Inflation was not as high in 1994, however, as it was in this episode. So it is not a perfect comparison either.

Minneapolis Fed staff’s best estimate is that when the FOMC raised the policy rate by 300 basis points in the 1994 tightening cycle, this translated into an increase of about 200 basis points in the 10-year real rate (Figure 4), which was coincidentally also about 200 basis points above the then-neutral 10-year real rate. So that is the key: It seems as though policy drove the 10-year real rate about 200 basis points above neutral.

How does that compare to our current tightening cycle? (See Figure 3.) If my estimate of neutral being zero before the pandemic still holds, then we have accomplished similar or a bit more tightening in this cycle than was achieved in the 1994 tightening cycle.

Yield Curve Suggests Policy Is Tight

As I stated earlier, the underlying inflationary dynamics are quite different today than in 1994, so simply repeating the 1994 tightening might not be enough. And perhaps the unique dynamics of the post-COVID reopening economy have caused neutral to increase.

Another indicator I look at to assess the stance of monetary policy is the shape of the yield curve. Specifically, if the yield curve is inverted, it might indicate that monetary policy is in a contractionary stance. A lot of public attention is given to the yield curve, and there is a robust debate about whether an inverted yield curve is a reliable recession indicator. I wrote about this in 2018. Setting aside its usefulness as a predictor of recessions, the yield curve does seem to give some indication of the stance of monetary policy. The long end of the yield curve should offer some signal of where market participants believe interest rates will settle once current economic and policy shocks have run their course; if markets understand that neutral has moved, it should be reflected in the long end of the curve. If current short rates are higher than long rates, then that might signal an overall tight stance of policy today. Figure 5 shows the history of the (nominal) yield curve with a number of inversions over the past 50 years, including the current inversion. 2

Depending on the specific measures chosen, the yield curve has now been inverted for more than 20 months, which is a relatively long and somewhat deeper inversion than most prior cycles, the Volcker disinflation period being the exception. The current inverted yield curve suggests that policy is in fact tight relative to the market’s understanding of neutral.

The Resilience in the Housing Market Nonetheless Raises Questions

Housing is traditionally the most interest-rate-sensitive sector of the economy. Prior yield curve inversions also coincided with a marked slowdown or even contraction in residential investment, as shown in Figure 6. Curiously, while residential investment fell in the first part of our tightening cycle, it has since reversed and has grown 5 percent over the past year.

What could explain this apparent resilience in residential real estate given monetary policy that has led to an inverted yield curve? We know that following the Global Financial Crisis, the country built far fewer housing units than were needed to keep up with population growth and household formation. Thus, there appears to be a significant shortage of housing that will take a long time to close. In addition, responses to COVID have led to an increase in people working from home, and that has led to increased demand for housing. In recent years there has also been a significant increase in immigration. While the long-run effect of increased immigration on inflation is unclear, immigrants nonetheless need a place to live, and their arrival in the U.S. has likely also increased demand for housing. Policy actions by the FOMC have driven 30-year mortgage rates from around 4.0 percent prior to the pandemic to around 7.5 percent today. Perhaps that level of mortgage rates is not as contractionary for residential investment as it would have been absent these unique factors which are driving housing demand higher. In other words, perhaps a neutral rate for the housing market is higher than before the pandemic.

Other Signals from the Real Economy Are Mixed

Monetary policy is a blunt instrument that eventually affects virtually the entire economy, not only housing. While high interest rates may not be slowing housing as much as in prior tightening cycles, it is nonetheless having an impact on other sectors of the economy. For example, auto loan and credit card delinquencies have increased from very low levels and are now at rates higher than existed before the pandemic, indicating that some consumers are feeling stress from increased borrowing costs. Overall, however, economic activity, consumer spending and the labor market have proven surprisingly resilient.

The FOMC has undeniably tightened policy meaningfully, both relative to the pre-pandemic period and to some prior tightening cycles. Nonetheless, it is hard for me to explain the robust economic activity that has persisted during this cycle. My colleagues and I are of course very happy that the labor market has proven resilient, but, with inflation in the most recent quarter moving sideways, it raises questions about how restrictive policy really is. If policymakers and market participants are misperceiving the neutral policy rate, that could explain the constellation of data we are observing. This is also a communication challenge for policymakers. In my own Summary of Economic Projections (SEP) submission, I have only modestly increased my longer-run nominal neutral funds rate level from 2 percent to 2.5 percent. The SEP does not provide a simple way to communicate the possibility that the neutral rate might be at least temporarily elevated.

1 These comments reflect my own views and may not necessarily represent the views of others in the Federal Reserve System or of the Federal Open Market Committee.

2 Conceptually, the real yield curve is a better measure of the stance of monetary policy than the nominal yield curve. That said, because nominal and real spreads have been quite similar over the past 18 months, the nominal spread in Figure 5 currently provides an equivalent measure of the stance of monetary policy. I plot nominal yields in Figure 5 simply because they are available for a longer time period than TIPS yields.

Related Content

Policy Has Tightened a Lot. How Tight Is It?

Policy Has Tightened a Lot. Is It Enough? (A Second Update)

The Interaction between Inflation and Financial Stability

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The U.S. Economy’s Soft Landing Is Still on Track

• Philipp Carlsson-Szlezak,
• Paul Swartz,
• Martin Reeves

A close look at consumer trends, monetary policy, and other trends gives reason for optimism — not pessimism.

While there’s been a recent string of disappointing macroeconomic data, in reality, these developments are signs of the U.S. economy’s strengths, not weaknesses. The economic pessimism of the last few years has often been rooted in a misreading of the U.S. consumer. Too often, they are cast as financially squeezed, burning through their pandemic-era savings, and reeling from the real income cut that inflation has inflicted on them. In this telling, demand is artificially high, and its collapse has been delayed, not averted. Consumption is also still distorted by post-pandemic gyrations, but aggregate consumption sits more than $1.5 trillion above 2019 levels in real terms. This strength, however, is not an unalloyed good for all firms — while high interest rates have been absorbed successfully in aggregate, they still create existential struggle for some firms and households. Executives need to resist the temptation to respond to every wrinkle in the volatile data and adjust their mental models to lead in an era of tightness.

Less than a year ago, many pessimists rejected the possibility of a soft landing for the U.S. economy. They argued that U.S. resilience was a confluence of lucky factors, such as pandemic-era savings that would eventually run out. As inflation moderated and growth remained remarkably strong, they grudgingly had to accept that the economy is far more resilient than they had thought.

• Philipp Carlsson-Szlezak is a managing director and partner in BCG’s New York office and the firm’s global chief economist. He is a coauthor of Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk (Harvard Business Review Press, 2024).
• Paul Swartz  is an executive director and senior economist in the BCG Henderson Institute, based in BCG’s New York office. He is a coauthor of Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk (Harvard Business Review Press, 2024).
• Martin Reeves is the chairman of Boston Consulting Group’s BCG Henderson Institute in San Francisco and a coauthor of The Imagination Machine (Harvard Business Review Press, 2021).

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Economics Essay Examples

Ace Your Essay With Our Economics Essay Examples

Published on: Jun 6, 2023

Last updated on: Jan 31, 2024

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Are you struggling to understand economics essays and how to write your own?

It can be challenging to grasp the complexities of economic concepts without practical examples.

But don’t worry! 

We’ve got the solution you've been looking for. Explore quality examples that bridge the gap between theory and real-world applications. In addition, get insightful tips for writing economics essays.

So, if you're a student aiming for academic success, this blog is your go-to resource for mastering economics essays.

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What is an Economics Essay?

An economics essay is a written piece that explores economic theories, concepts, and their real-world applications. It involves analyzing economic issues, presenting arguments, and providing evidence to support ideas. 

The goal of an economics essay is to demonstrate an understanding of economic principles and the ability to critically evaluate economic topics.

Why Write an Economics Essay?

Writing an economics essay serves multiple purposes:

• Demonstrate Understanding: Showcasing your comprehension of economic concepts and their practical applications.
• Develop Critical Thinking: Cultivating analytical skills to evaluate economic issues from different perspectives.
• Apply Theory to Real-World Contexts: Bridging the gap between economic theory and real-life scenarios.
• Enhance Research and Analysis Skills: Improving abilities to gather and interpret economic data.
• Prepare for Academic and Professional Pursuits: Building a foundation for success in future economics-related endeavors.

Paper Due? Why Suffer? That's our Job!

If you’re wondering, ‘how do I write an economics essay?’, consulting an example essay might be a good option for you. Here are some economics essay examples:

Short Essay About Economics

A Level Economics Essay Examples

Here is an essay on economics a level structure:

Band 6 Economics Essay Examples

Here are some downloadable economics essays:

Economics essay pdf

Economics essay introduction

Economics Extended Essay Examples

In an economics extended essay, students have the opportunity to delve into a specific economic topic of interest. They are required to conduct an in-depth analysis of this topic and compile a lengthy essay. 

Here are some potential economics extended essay question examples:

• How does foreign direct investment impact economic growth in developing countries?
• What are the factors influencing consumer behavior and their effects on market demand for sustainable products?
• To what extent does government intervention in the form of minimum wage policies affect employment levels and income inequality?
• What are the economic consequences of implementing a carbon tax to combat climate change?
• How does globalization influence income distribution and the wage gap in developed economies?

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Tips for Writing an Economics Essay

Writing an economics essay requires specific expertise and skills. So, it's important to have some tips up your sleeve to make sure your essay is of high quality:

• Start with a Clear Thesis Statement: It defines your essay's focus and argument. This statement should be concise, to the point, and present the crux of your essay.
• Conduct Research and Gather Data: Collect facts and figures from reliable sources such as academic journals, government reports, and reputable news outlets. Use this data to support your arguments and analysis and compile a literature review.
• Use Economic Theories and Models: These help you to support your arguments and provide a framework for your analysis. Make sure to clearly explain these theories and models so that the reader can follow your reasoning.
• Analyze the Micro and Macro Aspects: Consider all angles of the topic. This means examining how the issue affects individuals, businesses, and the economy as a whole.
• Use Real-World Examples: Practical examples and case studies help to illustrate your points. This can make your arguments more relatable and understandable.
• Consider the Policy Implications: Take into account the impacts of your analysis. What are the potential solutions to the problem you're examining? How might different policies affect the outcomes you're discussing?
• Use Graphs and Charts: These help to illustrate your data and analysis. These visual aids can help make your arguments more compelling and easier to understand.
• Proofread and Edit: Make sure to proofread your essay carefully for grammar and spelling errors. In economics, precision and accuracy are essential, so errors can undermine the credibility of your analysis.

These tips can help make your essay writing journey a breeze. Tailor them to your topic to make sure you end with a well-researched and accurate economics essay.

To wrap it up , writing an economics essay requires a combination of solid research, analytical thinking, and effective communication. 

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Some experts say the US economy is on the up, but here’s why voters don’t think so

PhD Candidate, University of Warwick

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Jessica Eastland-Underwood received funding from the University of Warwick's Department of Politics and International Studies to conduct their PhD research.

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Many Americans are gloomy about the economy , despite some data saying it is improving.

The Economist even took this discussion to TikTok. When its US editor John Prideaux examined inflation, wage and employment numbers, he concluded that the US has “an objectively pretty good economy”.

Is Prideaux wrong or the American electorate ? And if the US economy is bouncing back, why is President Joe Biden not seeing an economic bounce in the polls?

Political commentator Robert Reich recently explained : “The economy is getting better overall – but overall has become a less useful gauge of wellbeing.” Reich suggested that the usual way the economy is measured can obscure more diverging or individualised economic trends, such as wealth inequality . That is, the macroeconomic indicators are right, but that only tells us part of the story.

Pundits frequently turn to the same narrow measures to define the very large, complex concept of the economy. Widely quoted measurements such as GDP are often treated as synonymous with the economy itself. Importantly though, when polling firms asks Americans about the issues important to their vote , it is the economy and not GDP that is given as an option.

Voters think of the economy in very different ways. Researchers observe that the public often perceives the economy through the lens of their personal experience.

As part of my research, I carried out 17 in-depth interviews and reviewed social media comments, to find out what Americans mean when they say “the economy”. Answers included topics as varied as religion, marriage and nature.

This might seem incorrect, but economics researchers already know that these are all elements of the economy. Religion can shape economic behaviour . Marriage partners combine savings to make larger purchases . Finally, nature provides physical resources necessary for production and consumption.

Just one interviewee mentioned GDP, but only to say that GDP is not the economy. He recommended looking at “measures of wellbeing”.

Read more: Biden v Trump: winning suburbia is key to clinching the presidency in 2024

This is consistent with research seeking to better represent these other aspects of the economy important to people. It is from these more inclusive studies that we might understand American voters’ pessimism.

The Academy of Arts and Sciences’ Commission on Reimagining Our Economy released a report in November 2023, recommending additional measures to evaluate the economy around “wellbeing”: security, opportunity, mobility and democracy.

The report includes an interview with Kailin, a café worker and single mother in Kentucky. She worries about losing Supplementary Nutritional Assistance Program benefits or health insurance if she is given a pay rise. She explains that going a penny over the cut off point immediately disqualifies her from assistance, even when that is not enough to cover household expenses.

UK research organisations have experimented with citizens’ assemblies to bridge the gap between expert and everyday perceptions of the economy. During these discussions , participants use personal stories to explain the economy. As one citizen put it: “The huge thing that’s hanging in my head is corporate profits […], then the shareholders are getting nice dividends on the back of those profits, meanwhile, John’s father is freezing.”

The assemblies have produced an economic charter , focusing on fairness, innovation for social good, sustainability and transparency.

In the New York Times , Chrystal Audet, who lives in her car, tells interviewers, “It’s the irony of working and making a nice income and still not being able to afford housing.” The cost of renting a home is the worst on record , triggering record levels of housing insecurity. Chrystal is one of the 40-60% of homeless Americans who is employed but still can’t afford housing.

Dissatisfaction with the economy may also be linked to political dissatisfaction. US economist Paul Krugman recently noted that pessimism about the economy is stronger among Republicans than Democrats. Similarly, Black Americans viewed the economy more negatively during Trump’s administration.

A Washington Post-Ipsos poll interviewed Black Americans to investigate this trend. One interviewee, Francine, explained: “If I’m in a room with white women, I know that 50 percent of them voted for Trump… I look at them and think, ‘How do you see me? What is my humanity to you?’” Francine details how racism inhibits Black Americans’ economic opportunities, a well documented feature of the US economy.

These four examples – Kailin, John, Chrystal and Francine – show what might be described as subjective understandings of the economy. They are, after all, based on varied personal experience. However, these views are grounded in how they experience the economy.

Undoubtedly some voters feel that Biden deserves more credit for his economic achievements. However, voters are not feeling a positive glow, and for that reason may not trust what the experts, or government, are saying. This comes at a time when public trust in government is at an all-time low.

There is no universal agreement about how the economy is defined, let alone what determines a good or bad economy . However, this mismatch between data and public opinion could be an opportunity. Everyday experiences can help experts better understand where the economy isn’t delivering.

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3 issues that could make or break the US economy over the next year, according to top economist Mohamed El-Erian

• Mohamed El-Erian named three key risks that will determine where US growth is headed in 2024 through 2025.
• That includes changes to the Fed's inflation target and low-income consumer spending.
• Investors will also watch for a balance between technological innovation and geopolitical tension.

If Wall Street was wrong about recession odds in 2023 and 2024, forecasting for next year won't be any easier, Cambridge economist Mohamed El-Erian wrote in Project Syndicate . 

In his view, chances of a US soft-landing scenario still remain strong for the near-term, but there are three key risks that will determine how likely this really is.

First, all eyes are on the Federal Reserve as to whether it will double down in its 2% inflation chase, or if it can live with a slightly higher rate.

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According to El-Erian, the central bank's fixation on this figure could trap it between a rock and a hard place, in the case that US growth starts slowing before the target is reached.

In fact, the first quarter is already showing signs of this, with the latest GDP reading declining markedly against hotter-than-expected inflation. That has led to "stagflationary" alarm on Wall Street, a situation the Fed could only combat by hiking interest rates higher.

Since last year, El-Erian has warned 2024's inflation would get stuck between the 3%-4% mark , and called on the Fed to readjust its target a percentage higher ; otherwise, the central bank risks crushing the economy to achieve its goal, he's said before.

Second, America's growth trajectory will also depend on consumer spending, but especially among lower-income households. Though US consumption has generally stayed strong, lower-income brackets have taken the brunt of a declining environment . The cohort is increasingly strained by higher debt and eroded savings.

"Given high interest rates and some creditors' loss of enthusiasm, this cohort's willingness to consume will hinge on whether the labor market remains tight," El-Erian wrote.

Third, US growth is at the mercy of where the broader narrative goes — which could either mean an innovative boost or a international rupture:

"While technological advances promise a new favorable supply shock that could unlock higher growth and drive down inflation, geopolitical developments could do the opposite, as well as limit the scope for macroeconomic policy," he said. 

For instance, while technology such as generative AI and sustainable energy could mean transformative growth for at least a few years, international strife could spark stagflationary instability — such as in the case that crude surges over $100 a barrel, El-Erian wrote.

Watch: What is crypto, and is it making a comeback?

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Getting the Job Done: How Immigrants Expand the U.S. Economy

September 8, 2020 • 4 min read.

Immigrant workers put pressure on the U.S. labor supply, but foreign-born entrepreneurs also create jobs that increase labor demand, according to new research co-authored by Wharton's Daniel Kim.

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Wharton’s Daniel Kim speaks with Wharton Business Daily on SiriusXM about his research on immigration and entrepreneurship in the U.S.

In the United States, the economic impact of immigration is a lightning-rod topic that sparks strong feelings on both sides. Opponents have long held that immigrants take away jobs from American citizens and lower wage standards. Proponents dismiss that idea, saying immigrants expand the economy through their hard work and determination. The truth is somewhere in the middle, according to new research from Wharton’s J. Daniel Kim.

To be sure, immigrant workers ramp up competition for jobs, creating a surplus in labor supply for some sectors. But immigrant entrepreneurs have a more profound impact on overall labor demand by starting companies that hire new workers, creating a positive ripple-effect on the economy.

“The problem with the ongoing discussion is that it’s largely one-sided,” Kim said in a recent interview with the Wharton Business Daily radio show on SiriusXM. (Listen to the podcast at the top of this page.) “To be fair, both forces here simultaneously exist. In order for us to have a systematic understanding of the role of immigration on job creation, you need to take both accounts together. And this is what we do in the study.”

Kim is co-author of “ Immigration and Entrepreneurship in the United States ,” along with Pierre Azoulay , professor at MIT’s Sloan School of Management and associate with National Bureau of Economic Research (NBER); Benjamin F. Jones , professor at the Kellogg School of Management at Northwestern University and an associate with NBER; and Javier Miranda , economist with the U.S. Census Bureau. In their research, the scholars use comprehensive administrative data from 2005 to 2010 on all new firms in the U.S., the U.S. Census Bureau’s 2012 Survey of Business Owners, and data on firms listed in the 2017 edition of the Fortune 500 ranking to paint a more accurate picture of the economic impact of immigrants in America.

“The problem with the ongoing discussion is that it’s largely one-sided.”

“This paper works to fill in the picture through the lens of entrepreneurship,” the authors wrote. “By looking in a more comprehensive manner at the U.S. economy, the analysis helps balance the ledger in assessing immigrants’ economic roles.”

Dispelling Myths

Immigrants make up roughly 15% of workers in the U.S., yet they are 80% more likely than native workers to become entrepreneurs, according to the study. By those numbers, the assumption that immigrants leach jobs away from Americans isn’t incorrect, but it is incomplete. First- and second-generation immigrants are launching businesses across the spectrum, from small sandwich shops with one or two employees to major tech firms with thousands of workers. For example, when South Africa native Elon Musk built his Telsa plant in California, he spawned more than 50,000 jobs and injected $4.1 billion into that state’s economy in 2017.

“What we find, with overwhelming evidence, is that immigrants act more as job creators than they act as job takers in the United States,” Kim said during his interview with Wharton Business Daily.

“Immigrants in the U.S. create a lot more jobs than they take, primarily because many are prone to starting businesses that go on to create a lot of jobs.”

The study builds on previous research that dispels myths about immigrant workers and quantifies the facts, including that immigrant entrepreneurs account for close to 25% of patents and are more likely to hold STEM degrees. Using tax records, the researchers debunked another popular theory that immigration suppresses wages. They found wages were the same or slightly higher for immigrant-founded firms versus firms with native founders.

The authors encourage more research along the same dimensions, saying more information can help shape economic policy around immigration and help remove politics from a debate that’s often short on truths.

“That’s the main takeaway here, that immigrants in the U.S. create a lot more jobs than they take, primarily because many are prone to starting businesses that go on to create a lot of jobs,” Kim said.  “While I will not comment on the policy implications of these results, I believe that the broader discussion on the role of entrepreneurship and immigration on economic growth needs to account for both sides – because leaning on one would provide an incomplete picture.”

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United States Economy essay

The United States economy is affecting the breadth and depth of the country. The unemployment rate continues to rise and consumer confidence is shaky, despite the government’s efforts to stabilize the situation. Elisa Embers, a 31-year-old financial analyst, understands unemployment well. Standing in line in the unemployment office, she nervously twists her hands, shredding a Kleenex and wrinkling the papers in her hand. “I’ve been off work for four months. Now I have to come in and prove I need the help in order to keep getting my check. ” Her fear and frustration are as obvious as the tears in her eyes.

“I’ve looked and look and nothing’s out there. ” Embers isn’t alone. According to the Bureau of Labor Statistics, unemployment rose to 8. 9% from 5% this time last year and state unemployment offices are running out of money. “When the states can’t help, when the money is gone, then the country is going to be in real trouble,” said Alfred Mayer, Ph. D. , an economics instructor at California State University, Fullerton. “Consumer confidence is up from April, but still not as high as it should be. I hope I’m wrong and that things will turn around soon, but I doubt it.

” “I’m just not spending money right now,” said Bob Everett, 72. “I guess I’m preparing for the worst. ” The Los Angeles Times reports that retail spending has dropped as well, down 2. 7% from last year. The largest drop in retail sales is in the gasoline industry, dropping 15. 7%. Everett has canceled his summer vacation plans due to the hardship. “With prices going up and my [social security] income hasn’t kept up. It’s been really hard. ” In Santa Ana, Nicole Canter, 22, worries about the future of her waitressing jobs. “It’s affecting everyone,” she said.

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“I still have a job, but my hours have been cut and business is poor in general. ” Canter believes the economy as a whole is bouncing back and will soon translate into an improvement in business. “I have to believe it’s getting better, otherwise I’ll go mad with worrying. ” Things are difficult in Tustin as well. 72-year-old Geoffrey Simonson had his retirement planned and was set to live out his days in comfort, but his investments took a 40% hit and now he doesn’t know if he’ll have enough. “I just get so angry I could scream. But I don’t want to cash in now or I’ll lose too much.

I’m just going to wait it out and hope that things get better. ” Geoffrey is one of millions who lost money on the markets downward spiral. Fullerton resident Charles Gothart, 42, was laid off in April of 2008 and has struck out finding new work. “I’ve been living off my investments but the market has taken such a vicious hit that they’re not earning what they should be. ” Forced to eat into his capital, he has a rather pessimistic view of the economy. “It’s crap. Nothing short of that. We’ve all lost so much and so much of it was avoidable if the right measures had been taken.

For that, they should not be forgiven. ” Mayer believes that the worst is over and that the economy will see a gradual improvement over the next nine to twelve months. “Contrary to the opinion of the V-shaped recovery, this will be more gradual. ” The two prevailing schools of though are that the economy has hit bottom and will begin a recovery. The difference lies in how fast that recovery will occur. The V-shaped recovery is a rapid improvement in all economic factors, sending the U. S. back to where it was two years ago. They believe that things were bad but the public overreacted and the economy will come back.

The more predominant theory, and the one Mayer subscribes to, is that while the economy is recovering, it will take time – months if not years – to see the same degree of improvement. Both agree that the worst is over and the second half of the year will be better. This is welcome news to consumers. Both young and old have been affected by the instability of the economy. Sixteen-year-old Bethany Mills has had to move three times and is now living week-to-week in a hotel with her mother while her father searches throughout the state for work.

Tears fall as she speaks, her head bent down to the floor. “It’s so shameful. I don’t want to tell my friends. I just won’t let them come home with me. ” Bethany’s mother, Isador, tries to keep things positive. “My husband is interviewing for a new job tomorrow. I know he’ll get it. I know he will. ” The Mills family lost their home seven months ago, unable to keep up with the payments. This trend is growing throughout the country, with one out of every 374 homes in foreclosure. Nevada has the greatest number of foreclosures with one in every 68.

Families are being forced to move to different cities, into tiny apartments, into hotels or out on the streets. California had more than 150,000 residents move out of state due to the high cost of living. A mere ten years ago, the budget was balanced and the outlook for the country looked promising. Now, the Congressional Budget Office reports that the national debt stands at $11,305,673,498,034. 18 as of May 25, 2009. This is a truly scary figure as the government struggles to keep spending in check, balancing the war abroad with the battle for financial recover at home.

“The national debt is frightening,” Susan Smitton, 45, worries. “I’ll be eligible for social security in thirteen years and there won’t be anything there. And in this economy, it’s impossible to put anything aside when it all goes to survive. ” Smitton had grown a modest portfolio by investing in stock; however, the events of the last few months have virtually decimated her value. “I’ve lost 80%. I was into the wrong things. ” The Dow Jones has dropped significantly from last year, but it has been stabilizing over the past few weeks, rising and falling according to the whims of the market.

“People were in a panic last year but that fear is calming down and the market is improving,” Mayer says. “The Dow Jones and NASDAQ are indicators of how well the market is doing, but they’re not the only signs. ” Both the Dow Jones and NASDAQ have regularly finished down, but the numbers are not as drastic as before. “It’s a gradual shift, but a positive one,” says Mayer, predicting a steady rise in the market. Bloomberg. com reports that the mortgage rates are up from last month as well, to 5. 35%, increasing from 4. 94% last month.

This rise is directly related to the confidence in the United States economy and our astronomical deficit. Financial analyst, Ben Bernanke believes that the national debt threatens the nation’s stability but feels that the recession will soon be ending. Consumers hope that he is right. Nicole Forrester, 22, has seen a dramatic fall of sales in her flower shop, with sales dropping 64% from last year. “I don’t know how much longer I’ll be able to hold on. I’m terrified. ” The crisis is not limited to the large businesses like AIG or Bank of America. Small businesses are closing across the country.

From the corner butcher shop to the small dry cleaners, every facet of the economy is affected. “Business go down,” said Chi Lin, 62, owner of Best Cleaners. “Is not good. ” His business has fallen by nearly 50% since last year and Lin and his wife are pouring every hour of their day into keeping their business alive. They’ve offered coupons and discounts, which have lessened the drop but did not halt it. Charles Godwin, 42, has been one of the lucky ones. He was laid off last year, after having worked there for fourteen years, but thanks to wise planning on his part, his investments have held him through.

“I got a severance package which lasted a few months, but mostly, it’s investment income that’s kept me going,” he says. “I’d like to get a part time job so I stop eating at my capital, but overall, I’m better than a lot of people. ” Godwin hasn’t spent a lot of time searching for work and recently had his first interview since losing his job fourteen months ago. “I loved my job and I guess part of me is terrified to end up somewhere I hate. So I don’t look. ” He realizes that this is illogical; however, as he puts it, “there aren’t a lot of jobs out there anyway.

I’ll wait until the market shows more promise. ” Some people have been completely devastated by the economy. April Young, 54, is an elderly caregiver who is barely hanging on. “My client lost so much money in the market that my hours were cut to one half-day a week. I haven’t been able to find supplementary work. ” Young is one of the workers that falls through the cracks. She is self-employed so she doesn’t pay into unemployment or disability. Because she had knee surgery in December and will be having another on June 11, she is technically disabled; however, she doesn’t qualify for disability.

The only benefit she’s been able to get is food stamps so she is able to eat. “My daughters have been helping me. But I’m going to have to move as soon as I recover from my surgery. I can’t go yet, but I can’t make the mortgage payment either. I keep hoping that I’ll find work and get back on my feet. ” In the meantime, Young is selling various items she finds at yard sales on eBay. She’s not making a lot, but it’s some income at least. “Every little bit helps,” she says. Luiz Gonzales wasn’t so lucky. “The bank took my home, they took everything.

” Gonzales spends his days outside of Home Depot trying to get work, but most days, he stands all day without an offer. “I sleep under bridge. My family stays with friends, but they soon be without home too. ” Gonzalez stares into the distance, not quite meeting my eyes. His gaze shifts and he looks at me again. “I should be able to support my family. It is my duty. ” The current situation is not as bleak as it was, but the economy has a long way to go before it is healthy again. “It’s going to be a long road, says Mayer. “But we’re heading in the right direction. That’s a start. ”

Immigration's Effect on US Wages and Employment Redux

In this article we revive, extend and improve the approach used in a series of influential papers written in the 2000s to estimate how changes in the supply of immigrant workers affected natives' wages in the US. We begin by extending the analysis to include the more recent years 2000-2022. Additionally, we introduce three important improvements. First, we introduce an IV that uses a new skill-based shift-share for immigrants and the demographic evolution for natives, which we show passes validity tests and has reasonably strong power. Second, we provide estimates of the impact of immigration on the employment-population ratio of natives to test for crowding out at the national level. Third, we analyze occupational upgrading of natives in response to immigrants. Using these estimates, we calculate that immigration, thanks to native-immigrant complementarity and college skill content of immigrants, had a positive and significant effect between +1.7 to +2.6\% on wages of less educated native workers, over the period 2000-2019 and no significant wage effect on college educated natives. We also calculate a positive employment rate effect for most native workers. Even simulations for the most recent 2019-2022 period suggest small positive effects on wages of non-college natives and no significant crowding out effects on employment.

We are grateful for Rebecca Brough for her research assistance and suggestions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

MARC RIS BibTeΧ

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