Question

Hello! I have a macroeconomics research project about the macroeconomic environment of USA. I just need your help to get factual information about the following points:

•USA's labor force and unemployment rate within the last 15 years (2005 to the present year)

•USA's CPI and inflation within the last 15 years (200( to the present year)

•USA's monetary policy within the last 15 yrs (2005 to the present yr)

Thank you in advance. I'd really appreciate your help in helping me with this.

Answer 1

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A:

The US unemployment rate dropped to 13.3 percent in May 2020 from 14.7% in April which was the largest in records back to 1939 and below market expectations of 19.8 percent, as the economy gradually reopened. The number of unemployed persons fell by 2.1 million to 21.0 million as those who were on temporary layoff decreased by 2.7 million to 15.3 million. Among those not on temporary layoff, the number of permanent job losers increased by 295,000 to 2.3 million. The number of employed rose by 3.8 million to 137.2 million and the labor force participation rate increased to 60.8 percent, after hitting the lowest since January 1973 the month before. Since February, the unemployment rate was up by 9.8 percentage points and the number of unemployed persons increased by 15.2 million.

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	Actual	Previous	Highest	Lowest	Dates	Unit	Frequency
	13.30	14.70	14.70	2.50	1948 - 2020	percent	Monthly

Calendar	GMT	Reference	Actual	Previous	Consensus	TEForecast
2020-03-06	01:30 PM		Feb	3.5%	3.6%	3.6%	3.6%
2020-04-03	12:30 PM		Mar	4.4%	3.5%	3.8%	4%
2020-05-08	12:30 PM		Apr	14.7%	4.4%	16%	15.5%
2020-06-05	12:30 PM		May	13.3%	14.7%	19.8%	19.5%
2020-07-02	12:30 PM		Jun		13.3%	12.3%	12.3%
2020-08-07	12:30 PM		Jul
2020-09-04	12:30 PM		Aug
2020-10-02	12:30 PM		Sep				14.2%

TRENDS IN LABOR FORCE SIZE, PARTICIPATION, AND PROJECTIONS

Labor Force Size and Composition

Changes in labor force size and composition in the United States over the past 60 years may be attributed to three main trends. The first, as described in Chapter 3, was the overall growth of the population after the Second World War. Beginning in the early 1960s, the surge in labor force size was propelled by the large number of postwar babies who began to enter the labor force. A second contributor to labor force growth was the increase in the number and proportion of women, especially married women, undertaking employment. The third factor was an increase in the number foreign-born workers, which accelerated in the 1970s.

Between 1950 and 2010, the labor force¹ grew more rapidly than did the population as a whole. Whereas the total U.S. population increased 102 percent over the 60-year period, the corresponding increase in civilian labor force size was 148 percent. The highest rates of labor force growth were seen in the 1970s, when large numbers of the baby boom generation entered the prime working ages (Figure 5-1). By the 1980s, the majority of the baby boomers were of working age. While the absolute size of the labor force has continued to rise since the 1970s, the decadal growth rates have declined.

B:

Current US Inflation Rates: 2009-2020

The annual inflation rate for the United States is 0.1% for the 12 months ended May 2020 as compared to 0.3% previously, according to U.S. Labor Department data published on June 10, 2020. The next inflation update is scheduled for release on July 14, 2020 at 8:30 a.m. ET. It will offer the rate of inflation over the 12 months ended June 2020.

The chart and table below display annual US inflation rates for calendar years from 2000 and 2010 to 2020. (For prior years, see historical inflation rates.) If you would like to calculate accumulated rates between two different dates, use the US Inflation Calculator.

*For 2020, the most recent monthly inflation data (12-month based) is displayed in the chart.

Table: Annual Inflation Rates by Month and Year

Since figures below are 12-month periods, look to the December column to find inflation rates by calendar year. For example, the rate of inflation in 2019 was 2.3%.

The last column, “Ave,” shows the average inflation rate for each year, which was 1.8% in 2019. They are published by the BLS but are rarely discussed in news media, taking a back seat to a calendar year’s actual rate of inflation.

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Ave
2020	2.5	2.3	1.5	0.3	0.1
2019	1.6	1.5	1.9	2.0	1.8	1.6	1.8	1.7	1.7	1.8	2.1	2.3	1.8
2018	2.1	2.2	2.4	2.5	2.8	2.9	2.9	2.7	2.3	2.5	2.2	1.9	2.4
2017	2.5	2.7	2.4	2.2	1.9	1.6	1.7	1.9	2.2	2.0	2.2	2.1	2.1
2016	1.4	1.0	0.9	1.1	1.0	1.0	0.8	1.1	1.5	1.6	1.7	2.1	1.3
2015	-0.1	0.0	-0.1	-0.2	0.0	0.1	0.2	0.2	0.0	0.2	0.5	0.7	0.1
2014	1.6	1.1	1.5	2.0	2.1	2.1	2.0	1.7	1.7	1.7	1.3	0.8	1.6
2013	1.6	2.0	1.5	1.1	1.4	1.8	2.0	1.5	1.2	1.0	1.2	1.5	1.5
2012	2.9	2.9	2.7	2.3	1.7	1.7	1.4	1.7	2.0	2.2	1.8	1.7	2.1
2011	1.6	2.1	2.7	3.2	3.6	3.6	3.6	3.8	3.9	3.5	3.4	3.0	3.2
2010	2.6	2.1	2.3	2.2	2.0	1.1	1.2	1.1	1.1	1.2	1.1	1.5	1.6
2009	0	0.2	-0.4	-0.7	-1.3	-1.4	-2.1	-1.5	-1.3	-0.2	1.8	2.7	-0.4
2008	4.3	4.0	4.0	3.9	4.2	5.0	5.6	5.4	4.9	3.7	1.1	0.1	3.8
2007	2.1	2.4	2.8	2.6	2.7	2.7	2.4	2.0	2.8	3.5	4.3	4.1	2.8
2006	4.0	3.6	3.4	3.5	4.2	4.3	4.1	3.8	2.1	1.3	2.0	2.5	3.2
2005	3.0	3.0	3.1	3.5	2.8	2.5	3.2	3.6	4.7	4.3	3.5	3.4	3.4
2004	1.9	1.7	1.7	2.3	3.1	3.3	3.0	2.7	2.5	3.2	3.5	3.3	2.7
2003	2.6	3.0	3.0	2.2	2.1	2.1	2.1	2.2	2.3	2.0	1.8	1.9	2.3
2002	1.1	1.1	1.5	1.6	1.2	1.1	1.5	1.8	1.5	2.0	2.2	2.4	1.6
2001	3.7	3.5	2.9	3.3	3.6	3.2	2.7	2.7	2.6	2.1	1.9	1.6	2.8
2000	2.7	3.2	3.8	3.1	3.2	3.7	3.7	3.4	3.5	3.4	3.4	3.4	3.4

Calculating Annual Inflation Rates

Annual rates of inflation are calculated using 12-month selections of the Consumer Price Index which is published monthly by the Labor Department’s Bureau of Labor Statistics (BLS).

For example, to calculate the inflation rate for January 2017, subtract the January 2016 CPI of "236.916" from the January 2017 CPI of "242.839." The result is "5.923." Divide this number by the January 2016 CPI and then multiply by 100 and add a % sign.

The result is January’s annual inflation rate of 2.5%.

C:

Monetary policy concerns the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply. For example, in the United States, the Federal Reserve is in charge of monetary policy, and implements it primarily by performing operations that influence short-term interest rates.

Money supply[edit]

Main article: Money supply

The money supply has different components, generally broken down into "narrow" and "broad" money, reflecting the different degrees of liquidity ('spendability') of each different type, as broader forms of money can be converted into narrow forms of money (or may be readily accepted as money by others, such as personal checks).^[1]

For example, demand deposits are technically promises to pay on demand, while savings deposits are promises to pay subject to some withdrawal restrictions, and Certificates of Deposit are promises to pay only at certain specified dates; each can be converted into money, but "narrow" forms of money can be converted more readily. The Federal Reserve directly controls only the most narrow form of money, physical cash outstanding along with the reserves of banks throughout the country (known as M0 or the monetary base); the Federal Reserve indirectly influences the supply of other types of money.^[1]

Broad money includes money held in deposit balances in banks and other forms created in the financial system. Basic economics also teaches that the money supply shrinks when loans are repaid;^[2][3] however, the money supply will not necessarily decrease depending on the creation of new loans and other effects. Other than loans, investment activities of commercial banks and the Federal Reserve also increase and decrease the money supply.^[4] Discussion of "money" often confuses the different measures and may lead to misguided commentary on monetary policy and misunderstandings of policy discussions.^[5]

Structure of modern US institutions[edit]

Federal Reserve[edit]

Main article: Federal Reserve System § Monetary policy

Monetary policy in the US is determined and implemented by the US Federal Reserve System, commonly referred to as the Federal Reserve. Established in 1913 by the Federal Reserve Act to provide central banking functions,^[6] the Federal Reserve System is a quasi-public institution. Ostensibly, the Federal Reserve Banks are 12 private banking corporations;^[7][8][9] they are independent in their day-to-day operations, but legislatively accountable to Congress through the auspices of Federal Reserve Board of Governors.

The Board of Governors is an independent governmental agency consisting of seven officials and their support staff of over 1800 employees headquartered in Washington, D.C.^[10] It is independent in the sense that the Board currently operates without official obligation to accept the requests or advice of any elected official with regard to actions on the money supply,^[11] and its methods of funding also preserve independence. The Governors are nominated by the President of the United States, and nominations must be confirmed by the U.S. Senate.^[12] There is very strong economic consensus that independence from political influence is good for monetary policy.^[13]

The presidents of the Federal Reserve Banks are nominated by each bank's respective Board of Directors, but must also be approved by the Board of Governors of the Federal Reserve. The Chairman of the Federal Reserve Board is generally considered to have the most important position, followed by the president of the Federal Reserve Bank of New York.^[12] The Federal Reserve System is primarily funded by interest collected on their portfolio of securities from the US Treasury, and the Fed has broad discretion in drafting its own budget,^[14] but, historically, nearly all the interest the Federal Reserve collects is rebated to the government each year.^[15]

The Federal Reserve has three main mechanisms for manipulating the money supply. It can buy or sell treasury securities. Selling securities has the effect of reducing the monetary base (because it accepts money in return for purchase of securities), taking that money out of circulation. Purchasing treasury securities increases the monetary base (because it pays out hard currency in exchange for accepting securities). Secondly, the discount rate can be changed. And finally, the Federal Reserve can adjust the reserve requirement, which can affect the money multiplier; the reserve requirement is adjusted only infrequently, and was last adjusted in March 2020, at which time it was set to zero.^[16] At a reserve requirement of zero, the money multiplier is undefined, because calculating it would involve division by zero.

In practice, the Federal Reserve uses open market operations to influence short-term interest rates, which is the primary tool of monetary policy. The federal funds rate, for which the Federal Open Market Committee announces a target on a regular basis, reflects one of the key rates for interbank lending. Open market operations change the supply of reserve balances, and the federal funds rate is sensitive to these operations.^[17]

In theory, the Federal Reserve has unlimited capacity to influence this rate, and although the federal funds rate is set by banks borrowing and lending funds to each other, the federal funds rate generally stays within a limited range above and below the target (as participants are aware of the Fed's power to influence this rate).

Assuming a closed economy, where foreign capital or trade does not affect the money supply, when money supply increases, interest rates go down. Businesses and consumers have a lower cost of capital and can increase spending and capital improvement projects. This encourages short-term growth. Conversely, when the money supply falls, interest rates go up, increasing the cost of capital and leading to more conservative spending and investment. The Federal reserve increases interest rates to combat Inflation.