Economic analysis Assignment Example | Topics and Well Written Essays - 500 words

Economic analysis - Assignment Example For the past few years, economists surveyed by NABE have concluded that fiscal policy uncertainty including efforts to rein in the deficit was constraining economic growth. However, the survey released on Monday has indicated that 57% no longer believed uncertainty was holding back the recovery. On the other hand, 38% of the citizens thought the fiscal policy was restraining the recovery compared with 80% in March 2014. According to NABE survey, almost half of the respondents believe the current fiscal policy to be about right. The rest of the respondents are divided with about a fourth indicating it is too stimulative and the other fourth too restrictive (Davidson, 2015). The Federal Research officials Janet Yellen and Ben Bernanke have warned that restrictive fiscal policy creates headwinds for recovery rather than supporting it as it did during previous economic downturns. Bernanke said that excessively tight near-term fiscal policies have tremendously been counterproductive. The economists have also differed on the current shortfall with 44% criticizing it on excessive spending, 28% blaming it to the output gap, and 24% citing insufficient revenues. A quarter of the economists suggested that the Fed should raise interest rates this year. About 9 percent of them except the rate increase to occur within the first six months (Mankiw, 2014). On the other hand, two-thirds of the economists expect rates to rise during the second part of the year while a quarter believe that the Fed will keep policy on hold until 2016. In the United States, inadequate demand has tremendously constrained activities in the economy of US which has caused repeated downgrades to growth forecast. The current financial crisis and ensuing recession have put the productive capacity of the nation’s economy on a lower and shallower direction than the ones in the previous years. It is estimated that the potential