The Expanding U.S Economy in 2020

The Expanding U.S Economy in 2020

The economy of a country undergoes a trade cycle marked by four stages. The four phases include expansion, peak, recession, and depression. Various economic indicators such as production, inflation, business growth, employment, Gross Domestic Product (GDP), among others, show different forms of performance during the multiple phases of a trade cycle. The focus of this business essay is to determine the business cycle phase the U.S economy is currently operating by reviewing a business article published anytime between January 2020 and today by the New York Times.

In late 2019, economists forecast was that the economy was headed for the late stage of the business cycle. At the time, it was thought that the economy was at its peak after nine years of expansion after the 2007-2009 recession. Casselman (2020), on the New York Times, states that the expansion phase does not seem to slow down any time sooner. An article, Job Growth Gives the Economy an Upbeat Start to the year by Ben Casselman on February 7, published by The New York Times, stated that January 2020, the U.S economy continued to experience growth. In the expansion phase, an economy experience growth in employment, production, sales, and income.

The graph below is an illustration of the business cycle. The U.S is currently experiencing expansion (Bolded and italicized). As the diagram illustrates, during the expansion phase, the GDP of the country is growing. The curve is upward-moving when the economy is expanding. At this stage, the various sectors of the economy are increasing and growing, thus having a positive impact on the economy of a country.

Business Cycle

Peak

Real

GDP

Expansion

Recession

Depression

Time

The article notes that the continued growth in the jobs is an indication that the economy is in the expansion phase. Economists say that it is the longest expansion phase that the U.S economy has experienced. The economy continues to experience the action phase for the past ten years now.

The article reports that in January 2020, 225,000 new jobs were added into the economy. Initially, it was estimated that about 164,000 new payrolls would be created in January after a record low of 145,000 new jobs created in December 2019. Despite the increases in the number of jobs created in January, the unemployment rate rose a little higher to 3.6% as the number of people looking for jobs rose (Casselman, 2020).

According to Casselman (2020), multiple sectors of the industry experienced job growth while others faced a decline, which impacted the number of jobs created. A report by the U.S Bureau of Labor Statistics showed that healthcare, construction, warehousing, and transport industries experienced substantial growth in the number of jobs. The report identified unseasonably mild weather experienced in January as the main reason for the continued growth in the number of jobs in the construction and transportation sector. The manufacturing industry experienced a decline in the number of jobs created for the second month in a row.

Casselman (2020), also provides insight on how the various aspects of employment have been impacted. Comparing the number of jobs created in 2019 January, which were 269,900 jobs with January 2020, which hit 225,000, it is a decline. It is an indication that the economy is expanding at a slower rate compared to the same time last year.