Free Essay: Economic Fluctuations and Instability in the United States over the Last 100 Years

This paper discusses the various Economic fluctuations and instability in the United States over the last 100 years. The data used was obtained from United States government and is formulated in charts as was collected and presented by the United States bureau of statistics. This paper focuses on the various factors that define the economy and how they have fluctuated over time. In essence, this data indicates that America has had several fluctuations across several sectors and therefore as indicated, periods of recessions have led to economic downturns and fluctuating in the weighted index of the dollar, on the contrary, in some instances, various economic disruptions have had little impact on the economy.

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The first factor determined in the study as syndicated in the graph is labor productivity. Generally, this sector has improved tremendously over time since 1900 from 1.2 unit roots of labor to over 3.6 units of labor witnessed in 2017. These data shows that the labor productivity in the United States has risen consistently and has been sustained (Abramovitz, 1956). As observed there have been no dips since technology has advanced continuously, therefore, increasing the productivity of human capital from the data, the production per person has increased with the adoption of technology in various sectors of the economy.

This graph indicates that the productivity of labor has grown consistently but the rate fluctuations have narrowed over time indicating a rather predictable pattern as opposed in the earlier years from 1900 to 1960's (Abramovitz, 1956). As indicated by the chart, while the first segment fluctuated by as much as 0.087 points over the years, this fluctuation has stabilized within 0.03 points.

The effects of technology have been fundamental in shaping the economic performance of the American economy. Negative technology shocks were witnessed between the years 1908, the year 1914 and 1934. Most notable is the year 1907 when the financial sector got affected by a banking panic. Secondly the year 1914 was notable for the outbreak of World War 1 while 1930 was notable for the banking crisis. All these periods had a great impact on the financial status of the United States. Additionally, the year 1959 was greatly affected by steel strikes while in 1974 the oil crisis, which led to the collapse of the exchange system greatly, affected the American economy (Abramovitz, 1956). In 1987, the stock market crash had a minor effect though since the economy had recovered substantially.

As indicated by the graph, negative nontechnology shocks were witnessed post World War 1 era, additionally; non-technology stocks were witnessed to a garter extent during the great depression. Later on the variations on the impacts of technology and non-technology effects have stabilized due to fiscal strategies that were created to absorb shocks in the economy.

The US economy has addressed child labor issues and over time, fewer children have been engaged in the labor force. Children under the age bracket between 5-16 years were engaged to as high as 3% during the boom of World War 1(Klein, 1950). This rate has fallen drastically to as much as negative 18%.

The data from the federal reserve indicates that financial assets in the US economy have grown steadily to as high as 12% of the GDP while the percentage of tangible assets have reached 3% as of 2017(The white House, 2017). This trend has been aided by industrialization during the 1970-1980 era where technology was heavily employed in production. The data shows that post banks shock, financial investments increased and this has been reflected by positive performance in the New York stock exchange.

The decline of the industrial production in the 1940's led to a decline in the output of goods in the year 1957. This period stagnated the output of the economy despite the fact that later the economy picked and accelerated at a fast pace.

The US dollar index greatly fluctuated over the year, this data has been indicative of the performance of the US economy in the long run (The white House, 2017)( Friedman & Schwartz, 2008). Despite the huge fluctuations though, sometimes the value of the dollar has not been indicative of the performance of the economy either. The dollar index on a real trade-weighted basis has fluctuated from an index of 80 and has appreciated to an index of 130. Its however notable that the dollar did not depreciate on all periods of recession as noted by the dollar appreciation in the 1980's, notably, this period was marked with high interests rates that favored a lot of capital inflow into the US economy. With the high-interest rates employed to counter budget deficit, there was a trade deficit thereby affecting the economy negatively later which was marked by a sharp decline in the value of the dollar.

In conclusion, it can be seen that the US economy has gone through periods of recessions and they have had a negative effect on the performance of the economy. On the other hand, technology adoption has greatly increased labor productivity; therefore, the productivity of labor is expected to increase over time with the introduction and adoption of better technologies. The data obtained indicate that economic shocks due to technology and non-technology factors have stabilized and therefore technology and the non-technology bubble can be predicted to have little devastating effects on the economy in future.

References

Klein, L. R. (1950). Economic fluctuations in the United States, 1921-1941.

Friedman, M., & Schwartz, A. J. (2008). A monetary history of the United States, 1867-1960. Princeton University Press.

Abramovitz, M. (1956). Resource and output trends in the United States since 1870. In Resource and output trends in the United States since 1870 (pp. 1-23). NBER.

The white House, (2017), Together with the annual report of the council of economic advisers