Consumer Price Index, Economic Growth, Unemployment, and the Business Cycle

Topic: Economics
Words: 429 Pages: 1

Forbes News on Consumer Price Index (CPI)

The selected item is a Forbes news event that addressed microeconomics concepts in CPI, business cycles, and economic growth. It identified the U.S. economy’s inflation peaks and weaknesses, where the price index results in a high unemployment rate (Broverman, 2022). For this study, the significant concerns are CPI, business cycle, economic growth, CPI calculations, U.S. unemployment rates, and analysis of the concepts.

CPI, Business Cycle, and Economic Growth

CPI is the average measure of inflation and deflation of commodities in the urban market over time. Price changes include automotive fuel, utility bills, and food (U.S Bureau of Labor Statistics, 2022). On the other hand, economic growth is viewed as the increase in Americans’ income and the ratio between earnings and inflation rates (Ponciano, 2022). A business cycle is a change in a country’s economic activity recorded as the rise and fall of the economy (Fridson, 2022). The three terms are dependent on the evaluation of the microeconomics concepts.

CPI Calculations (2018-2021)

Price Index for Gasoline

Fuel
2018 2.74
2019 2.77
2020 4.17
The average change in index points 1.43
% Change 1.43/2.74*100= 52.18

The high index indicates high commodity inflation (Tepper, 2022).

Unemployment Rates in the U.S

The unemployment rate in the U.S. has risen in the near past up to 3.51% (Barone, 2022). The rates have been rising since the country’s economy is deteriorating, and employers have been unable to sustain employees based on the high costs of running their organizations (Broverman, 2022). Apart from economic deterioration, commodity prices inflation has shut down many businesses since small business owners pay higher taxes.

USA’s Economic Growth

Ponciano (2022) reported that the country’s economy shrank worse between 2018 and 2021. According to the U.S. Bureau of Economic Analysis, the margin was up to 1.62% in the previous years (Ponciano, 2022). In the first quarter of 2021, COVID-19 cases accounted for drawbacks to the country’s economy.

USA’s Business Cycle

In the past three years, the country’s business cycle has been facing the negative side of the economy. High commodity prices in essential services such as food and fuel have impacted the business cycle, and the recession began in March 2020 (Fridson, 2022). Lastly, the economic crisis has overpowered the business cycle of the country.

Analysis

CPI, business cycle, and economic growth are critical concepts of microeconomics. CPI addresses inflation of prices in essential goods and services, while economic growth calculates the increase in income based on inflation. Lastly, the business cycle combines the concepts of CPI and economic growth in calculating the country’s GDP.

References

Barone, R. (2022). Inflation peaks, the economy weakens; the Fed’s last hurrah. Forbes.

Broverman, A. (2022). Why is inflation so high? Forbes.

Fridson, M. (2022). Overpowering the business cycle. Forbes. Web.

Ponciano, J. (2022). U.S. Economy Shrank Worse-Than-Expected 1.6% Last quarter as recession fears grow. Forbes. Web.

Tepper, T. (2022). Why is the price of oil rising? Forbes.

U.S Bureau of Labor Statistics. (2022). Consumer Price Index Home.