The US Economy: 2007

Similar to the data for GDP and inflation, the data for unemployment shows that America’s economy is just a little bit above average. The current rate of unemployment of the average of the past ten months of 2007 is 4.56% (BLS, 2007). The average rate of unemployment is 5.5% over the past twenty years (BLS, 2007). Therefore, the current rate of unemployment is below the average of the past 20 years by 1.18 percentage points (BLS, 2007). The lowest unemployment rate of the past twenty years was 4% in 2000 and the highest unemployment rate was 7.5% in 1992 (BLS, 2007). So we are actually much closer to the lowest unemployment rate than the highest. As shown with the graph below, unemployment goes up and down as time changes and different events affect the economy.

I currently believe that the American economy is doing slightly well. My old band teacher used to say, “To be average, scares the hell out of me”. Well, we’re not average. We just aren’t in the greatest time in history for rapid economic prosperity. Many economists think that the only reason we aren’t in a recession right now is because the unemployment rate is so low (Economist, 2007). They’re saying that with not many people building houses right now and the fact that defense spending has gone down, we should in fact be in a recession right now (Economist, 2007). I have come to the conclusion that these people are crazy and 2007 is going to be a good year for the economy. All three parts of Macroeconomic data show that we are just barely above average. “In both 1990 and 2001, Wall Street’s seers were predicting modest growth when the economy, it turned out, was already contracting” (Economist, 2007). 2001 and 1990 were our two worst years of the past twenty for the economy as shown by the graphs above and they were the result of bigger events. 1990’s poor economy was the result of the Gulf War, high interest rates, and poor economic planning by the government and 2001 was the result of the 9/11 terrorist attacks. Unless something awful happens within the next month, like Ben Bernanke being captured by Al-Qaida, I don’t think 2007’s economy could turn out badly.

To summarize, the current American economy of 2007 is running well. I believe that with all areas of Macroeconomics above average, we are doing well, and there is no reason for concern. While studying economics is always as fun as fifteen roller coasters combined, I am depressed to say that the economy is not doing anything particularly out of the ordinary. Everything is stable, but in economics that’s usually a good thing. We’re more likely to have something bad happen than to have a time of unpredicted economic prosperity. Everything is as it should be.