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    Economics fiscal policy: current recession issues

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    What is the "current macroeconomic situation" (e.g. worrying about inflation and/or recession) in the U.S.?

    What should the U.S. Congress and the Federal Reserve do about it?

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    The current macroeconomic situation:

    The current macroeconomic situation is gloomy. The unemployment rate is high and there is no sign of improvement. Consider this, there are families where one or more earning members are searching for jobs but not getting a positive reply, On the other side private employers do not want to increase their costs. So, even when there is an increase in orders they refrain from employing more workers. The employers are not optimistic that the increase in orders will continue. The FOMC latest press release supports this gloomy outlook. The problem is low aggregate demand. This means there are fewer orders with businesses. This is to be expected, because if people in families are unemployed, the families tend to spend less. The lower spending leads to lower aggregate demand in the US economy. The production level decreases and in turn leads to lower levels of employment (Blanchard.O, 2008).

    The opinion that the current economy is gloomy is also seen in the credit market. Despite the lower rates of interest, banks are reluctant to lend. There are many reasons for this. The bank does not find the credit of potential borrowers up to the mark. ...