U.S. Economic Growth in a Post-Recession Economy

Jude Pandova
I BBA LLB

Index:
1. Hypothesis
2. Background
-Severity of the 2008-09 Recession
3. Fiscal Policy Response to the Financial Crisis and Recession
4. A Sustained but Slow Economic Recovery
5. The Shape of Economic Recovery
- Demand Side Problems:
-Supply Side Problems

6. Economic Projections

Hypothesis:
Study of whether the Congress reforms and fiscal responses could balance the struggling US economy following the 2007-2009 Recession. Also a study of a viable projection as to current Macroeconomic concerns including whether the economy is in a sustained recovery, rapidly reducing unemployment, speeding a return to normal output and employment …show more content…

Therefore, sustainable recovery would depend on more enduring sources of demand such spending by consumers and businesses reviving to give continued momentum to the recovery. To a degree, this occurred, but the momentum provided has been lackluster, with the pace of growth decelerating to a 1.8% annualized rate, and the output gap remains sizable (see Figure 2), prompting recurring concerns about the recovery’s sustainability.7

While business investment spending has been relatively strong during the recovery, consumer spending, typically accounting for two-thirds of final demand, has been relatively weak. Moreover, in 2011-2012, the sharply fading effects of fiscal stimulus and weaker growth in Europe have likely dampened economic growth.8 Nonetheless, economic activity in the private economy shows signs of slow but steady improvement.

Credit conditions have improved, making getting loans easier for consumers and businesses, loosening a constraint on many types of credit supported expenditures. The Fed’s January 2013 survey of senior loan officers indicated that, on net, bank lending standards and terms continued to ease during the previous three months and that the demand for commercial and industrial loans had increased.9
The stock market has rebounded and interest rate spreads on corporate bonds have narrowed. The Dow