Introduction: Gross Domestic Product (GDP) and Growth
The decade between 2010 and 2019 was phenomenal for the United States economy because it was the first decade the country did not record a recession since 1850. The United States experienced a stabilized economy and an upward growth between 2010 and 2019, although the economy dropped drastically from 2020 due to the Covid-19 pandemic. For instance, the GDP for 2019 was $21,433.22B, a 3.98% growth from the 2018 GDP (Macrotrends, n.d.). According to the World Bank (n.d.), the Gross Domestic Product for 2017 was $19,542.98B, a 4.26% growth from 2016. The United States GDP and growth for 2014 and 2015 were 2.53% and 3.08%, an increment of 0.68% and 0.55%, respectively (The World Bank, n.d.). The GDP growth for 2013 was 1.84%, a drop of 0.41% from the previous year (Macrotrends, n.d.). The GDP growth for 2012 was 2.25%, an increment of 0.70% from 2011, while the GDP growth for 2011 and 2010 were 1.55% and 2.56% (The World Bank, n.d.). The GDP growth for 2011 dropped by -1.01%, while it increased by 5.10% in 2010 (The World Bank, n.d.). Generally, the United States recorded an upward trajectory in its economy from 2010 to 2019.
One of the significant happenings in the United States economy between 2010 and 2019 was the interest rates were reduced significantly by the Congressional Budget Office (Coscieme et al., 2020). As a result of the reduction of the interest rates, the government has been able to shoulder huge Federal debts, thus, reducing the borrowing cost for other financial and investment specifications in the country. Another major event in the United States economy between 2010 and 2019 was the Affordable Care Act, which sharply cut the cost of accessing medical services (Coscieme et al., 2020). As a result of the country’s ease of access to healthcare services, the economy grew steadily from 2010 to 2019 before the Covid-19 pandemic hit the world.
Unemployment and Inflation
The unemployment rate in the United States dropped from 10.8% in 2010 to 4.5% in 2019 (Coscieme et al., 2020). The decline in the rate of unemployment also declined among each age cohort because of the steady growth of the economy. As the economy grew from 2010, the job market grew and required new employees to fill the job positions created by the economic growth. The inflation rate in the United States also dropped from 2010 to 2019 because of the reduction of interest rates on loans and products (Coscieme et al., 2020). Besides, the Affordable Care Act allowed people to access medical services at a lower cost.
Interest Rate Fluctuations
Interest rates have remained relatively low throughout the 2010 and 2019 decades. The interest rates in the last decade have stayed at 2% since Congress enacted the interest rates reduction proposal in 2010 (Coscieme et al., 2020). However, the 2012 war in Afghanistan affected the United States economy. The war disrupted the United States’ economic relationships with the Middle East countries (Connah, 2021). According to Connah (2021), the United States placed trade barriers on Afghanistan and other Middle East countries that supported it. As a result, the number of exports and imports between the United States and the Middle East countries was negatively affected. As a result of the war between the United States and Afghanistan, the GDP of the U.S. dropped by -0.41% in 2013 (The World Bank, n.d.). The rates of interest led to a reduction in inflation. The decrease in the interest rates from 2010 also attracted more foreign and domestic investors, creating more job opportunities for the people. The economy of the United States grew from 2010 to 2019 due to these factors.
Foreign Trade
The exports and imports in the United States increased steadily from 2010 to 2019. The number of exports grew from $1.25 trillion in 2010 to above $1.5 trillion in 2019 (Tai, 2021). On the other hand, imports grew from $1.75 trillion in 2010 to above $2.5 trillion in 2019 (Coscieme et al., 2020). The increased exports and imports in the United States between 2010 and 2019 were are directly related to stable GDP growth since this measure us dependent on money spent for imports that are, in turn, brought into economy from exports. As a result, there is a correlation between rising GDP and the increasing size of imports and exports. Moreover, lowered interest rates in 2010 attracted more investors and stimulated the domestic production, which increased export and the nation’s profit. Finally, the decline in joblessness meant that more people are involved in industrial performance, producing more goods to import and receiving money to buy imported items.
Government Policies
Fiscal Policy
The United States government spent a total of $3.456 trillion in 2010, which was 23.4% of its GDP (The Balance, 2021b). In 2011, the government spent a total of $3.834 trillion of its revenue, which was 23.4% of its GDP (The Balance, 2021a). The percentage expenditure of the United States government kept rising over the years from 2010 to 2019. In 2019, the United States government spent 45.3% of its revenue, which increased from 35.81% in 2018 (Tai, 2021). The rate of taxation also increased over the years from 2010 to 2019. The reason for the increase in tax and expenditure in the country was attributed to the efforts by the government to mobilize more resources that could cater to the rising needs and demands in the market (Summers & Rachel, 2019). As the government was mobilizing more resources, the rate of taxation and other subsidies relied on by the government rose over the decade between 2010 and 2019 (Tai, 2021). In order to reduce taxation, expenditure, and other subsidies, the United States government has introduced the strategy of borrowing money from the public and promising to repay in the future with some interest. As a result, the government ensures it does not borrow from foreigners who might interfere with the country’s economy.
The government’s new fiscal policy to borrow from its citizens and repay in the future with interest positively impacted businesses and investors. First, the government ensured that the revenue collected in the country circulated in its economy and helped it grow (Summers & Rachel, 2019). As the economy grew, businesses developed, and the job market opened to more employees. Local and foreign investors also got an opportunity to try new ventures in the United States, which positively impacted the country’s economic growth (Summers & Rachel, 2019). The new fiscal policy is expected to help the United States economy grow to new levels in the next decade.
Monetary Policy
The monetary policies adopted by the government between 2010 and 2019 were the open market operations, the discount rates, and the reserve requirements (Tai, 2021). The government passed regulations to persuade all banks and lending bodies to hold enough reserve funds to ensure continuity and survival in the market in case of a recession or a sudden withdrawal. This monetary policy has kept most banks and money lending bodies in good operations for the decade between 2010 and 2019. The other monetary policy adopted and has been in operation since 2010 is the interest rate reduction for loans taken by banks from the Federal Reserve Bank. The interest rate reduction has helped banks increase their operations over the decade. The third monetary policy adopted by the government in 2010 was open market operations. The open market operations require the central bank to buy and sell securities in the open market, which influences money availability and supply in the economy.
To realize further growth of the economy, the United States government has implemented new monetary policies to sustain the economy into the future. The current economic policies of the United States government include stabilizing prices, moderating long-term interest rates, and promoting employment for its citizens. The stabilization of prices and employment promotion for unemployed citizens will impact the economic growth of the country positively (Tai, 2021). The new monetary policies will attract more domestic and foreign investors to the country. The investment increment will create more job opportunities and positively impact the country’s economy’s growth (Glick, 2019). As the country’s economy stabilizes, the government will realize more revenues to be used in government projects to raise the people’s living standards.
Conclusion
I concur with the economic actions taken by the United States government between 2010 and 2019. The financial measures helped the country record a significant increase in GDP and other business-related activities. This tremendous growth in the country’s GDP is attributed to the government’s strategies from 2010 to grow its economy. The number of exports and imports in the United States also grew steadily from 2010 to 2019. Two significant actions the government implemented to grow its economy in 2010 were lowering interest rates and introducing affordable healthcare coverage. These implementations helped the country’s economy grow because domestic and foreign investors were attracted to the country. As a result, job opportunities were created, leading to a reduction in the unemployment rate. The strategies adopted by the United States government are expected to steer it toward more advanced economic growth. The economic growth will also help the government to remain stable and cater to its growing population.
References List
Connah, L. (2021). US intervention in Afghanistan: Justifying the Unjustifiable? South Asia Research, 41(1), 70-86.
Coscieme, L., Mortensen, L. F., Anderson, S., Ward, J., Donohue, I., & Sutton, P. C. (2020). Going beyond Gross Domestic Product as an indicator to bring coherence to the Sustainable Development Goals. Journal of Cleaner Production, 248, 119232. Web.
Glick, M. (2019). Antitrust and economic history: The historic failure of the Chicago school of antitrust. The Antitrust Bulletin, 64(3), 295-340.
Macrotrends. (n.d.). U.S. GDP 1960–2022. Web.
Summers, L. H., & Rachel, L. (2019). On falling neutral real rates, fiscal policy and the risk of secular stagnation. In Brookings Papers on Economic Activity BPEA Conference Drafts, March (Vol. 7).
Tai, K. T. (2021). Open government research over a decade: A systematic review. Government Information Quarterly, 38(2), 101566.
The Balance. (2021a). How the 2011 budget almost caused a U.S. debt default. Web.
The Balance. (2021b). Fiscal year 2010: Obama’s first budget and what was spent. Web.
The World Bank. (n.d.). GDP, PPP. Web.