Business Studies Paper on Homework Scenario: Federal Finance

Forecasting the economic performance of any economy is critical in shaping economy policies and investor and consumer confidence. These predictions are based on key economic growth indicators such as gross domestic product (GDP), gross domestic purchases, disposable personal income, inflation, unemployment rate, and purchasing power parity. According to the latest economic statistics released by the U.S. Bureau of Economic Analysis, the real GDP increased by 2.2 percent while the country’s real gross domestic income (GDI) increased by 1.7 percent over the same period. These estimates were for the last quarter of 2018. This marked a significant drop from the third quarter where the country registered a 4.6 percent growth in the GDI and 3.4 percent for the GDP (BEA, 2019). The latest estimates also indicate that the country’s unemployment rate stands at 3.8 percent (BLS, 2019). Figures released by the Congressional Budget Office (CBO) in January 2019, the Federal deficit stood at $897 billion while the current Federal debt was estimated to be $16 billion (CBO, 2019). The last budget approved by the Congress had a deficit of $779 billion out of the estimated $3.654 trillion Federal total revenue against an expenditure of $4.094 trillion (Mulvaney, 2017).

From the government’s estimates on key economic growth indicators, it can be concluded that personal expenditures and purchasing powers of Americans reduced due to various factors including unsuitable political climate and bilateral relationship between the U.S. and other countries such as China. The slight reduction in real GDP estimates for fourth quarter compared to the third quarter of 2018 points to the difficulties faced by both government and the general public during the government shutdown. The dropping unemployment rates indicates that despite the various economic challenges the country has faced, new jobs are still being created. It is a sign of the resilience of the country’s economy. However, the growing Federal deficit and debt is an indication of an unsustainable fiscal policy.


BEA. (2019). Gross Domestic Product, 4th quarter and annual 2018 (third estimate); Corporate Profits, 4th quarter and annual 2018. U.S. Bureau of Economic Analysis. Retrieved from:

BLS. (2019). “Unemployment Rate – Bureau of Labor Statistics Data”. U.S. Bureau of Labor Statistics. Retrieved from:

CBO. (2019). “Budget”. Congressional Budget Office. Retrieved from:

Mulvaney, M. (2017). “America First: A Budget Blueprint to Make America Great Again” (PDF). Office of Management and Budget. Retrieved from: