Topic: The U.S. economy is about to get an injection of rocket fuel. Many econom

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Topic:   

The U.S. economy is about to get an injection of rocket fuel.

Many economists have argued that "this is as good as it gets" for U.S. economic growth. But President Trump's $1.5 trillion Tax Cuts and Jobs Act could kick economic growth into high gear and give a further boost to the long, strong stock market rally.

Now in the ninth year of an underwhelming recovery, the economy was long held back by an overhang of debt and speed bumps from China to the oil patch. It's finally hit its stride and seems set to step up its pace in 2018.

"We've got a global synchronized boom with low inflation," said strategist Ed Yardeni, president of Yardeni Research. He called it an ideal "Goldilocks scenario" for investors, with the economy neither too hot or too cold.

If it continues until June 2019, the U.S. economic expansion will break the record 120-month run of the 1991-2001 expansion.

Review the news clip given above then answer the following questions:

If you are an investor, do you think this is the right time for you to invest say hypothetically, $100,000? If yes, why and if no why not?

What will be the impact of this act on employment in the coming years since US has a very low rate of employment.

As a student of economics, give 5 steps as “suggestion plan” to sustain economic growth.  

Explanation / Answer

1.

If I am in investor, then I would like to invest in the US economy as it is on the verge of economic expansion after the crisis of 2008 and subsequent recovery in after years. My investment plan is based upon the fact that the proposed tax cuts as well as the job act will strongly boost the aggregate demand and supply will be ready to cater the demand. It will bring the expansion in the USA economy. Hence, I would be the beneficiary if I invest now in the US economy.

2.

USA has a low rate of unemployment that is 4.1%, but it also includes the part time employment. After the act, the new employment opportunities will be created and part time employment will be converted into the full time employment.

Further, the unemployment level does not include discouraged workers. After the implementation of the act, the number of discouraged workers should come down and the labor participation rate will increase. Hence, the unemployment rate will not change, but it will be better and real representative of the economy of the USA.

3.

5 steps of the suggestion plan are as follows:

A. Setting up regulatory guidelines that controls the speculating trading behavior without affecting the soul of a market based economy

B. Creating a joint network of different federal agencies such as SEC, Federal Reserve for information sharing and making collaborative efforts

C. Building and implementing a complementing plan of fiscal policy and monetary policy on the basis of industry specific needs

D. Putting more emphasis upon the automatic stabilizers

E. Proactive supervision of the economy with remedial action

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