Aggregate Demand/Supply and the Current US Economic Condition
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I am wondering, what is the general assessment of the US economy over the next year or two in tems of Real GDP growth and inflation....ignoring business cycle effects...just in tems of current conditions regarding the aggregate supply (AS) and aggregate demand (AD) sides of the US economy and their COMBINED EFFECT on Real GDP Growth and inflation...
How do AD and AS come into play?
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Solution Summary
U.S. economic growth is emphasized.
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U.S. economic growth is still expected to be steady this year, but inflation prospects are a bit higher, according to a poll of top economists released on Sunday, with labor and energy costs the biggest threats.
Economists polled for the April issue of Blue Chip Economic Indicators put U.S. economic growth at 3.7 percent this year, matching the consensus estimate last month. However, their forecast inflation was a bit higher, with U.S. consumer prices rising 2.6 percent, compared with last month's prediction of a 2.5 percent increase this year.
The government is scheduled to release its first estimate of first-quarter gross domestic product on April 28, and the survey put GDP growth at an annual rate of 3.9 percent, after adjustment for inflation. However, economic expansion is expected to slow during the year, with the fourth-quarter growth rate seen at 3.3 percent.
Higher energy prices are "expected to reduce spendable income and curtail consumer spending as long as they remain near current levels, particularly among low and middle income households," the publication said, with further price increases a threat to economic growth and to corporate profits.
However, the survey said a bigger threat to corporate margins over ...
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