Unit_2_Ip

UNIT 2 IP Stacy Carpenter AIU University Lower Division Capstone – Moore Abstract I discuss the expected U.S GDP growth rate to the local Chamber of Commerce to give business leaders an idea of what the economy may look like based on recent history and expected future conditions. UNIT 2 IP GDP is the increase in economic growth in the value of goods and services produced by an economy. It is measured by the percent rate increase in real GROSS DOMESTIC PRODUCT. The growth is calculated in order to take the inflation out of the price of goods and services produced. Our economy is a market oriented economy where individuals and businesses make most of the decision. To determine GDP, we need to add the various components of the economy that are a measure of all the goods and services produced here in the U.S. Most of the goods and services are purchased by consumers, so we add what consumers spend on them with investments made by industries. We take the difference between the value of all exports and the value of all imports. Lastly, we add what the government spends with our tax money. We can calculate the GDP using the formula Y=C+I+(X-M) +G. C represents the purchase by consumers, I represents the investment of industries, X and M represent the exports – the imports, and G represents what the government buys with tax money. The economy has now moved from a recovery phase into an expansion phase. In 2010 the economy increased 2.9% marketing the biggest annual increase since 2005. The spending of consumers has increased at a 4.4% rate after having averaged a 2.2% rate in the first three quarters of the year. The United States has had an average quarterly GDP growth rate of 3.30%. Current GDP statistics are updated each month by the Bureau of Economic Analysis states Amadeo in About.com. (Amadeo, 2011). Statistics show that the economy grew 1.8% in Q1 in 2011, 2.4% in Q2, only 2% in Q3, and 3.2% in Q4. These statistics show that in Q1 the economy grew due to a drop in government spending, Q2 shows an increase due to less inventory replenishment in businesses. Q3 shows that the economy grew but not enough to create a lot of jobs. Lastly, Q4 shows a dropped GDP due to housing shadow inventory and an increase due to consumer spending. (Amadeo, 2011). A U.S. Quarterly Forecast shows the U.S GDP to be $13,872 in 2012 and $14,259 in 2013; this represents a 1.9% increase from 2011 to 2012 and a 2.8% increase from 2012 to 2013. (US Forecasts, 2011). References: Amadeo, K. (2011). GDP Current Statistics. Retrieved from http://useconomy.about.com/od/economicindicators/a/GDP-statistics.htm MarketWatch. (2011). GDP accelerates to 3.2% rate in fourth quarter. Retrieved from http://marketwatch.com/story/us-economic-growth-accelerates-to-32-rate-2011-01-28 Trading Economics. (2011). U.S. GDP Growth Rate. Retrieved from http://tradingeconomics.com/inited-states/gdp-growth US Forecasts. (2011). US Economic Forecast. Retrieved from http://www.e-forecasting.com/us_economic_forecasts.htm