1. The Global Main Economies US, EU, Japan, and China Together Account for 70% of the Global Economy

2. How is the US Doing on Growth, Unemployment, and Inflation? These are the Big Three indicators of how well the economy is doing.

3. 2010 Real Economic Growth = 2.8 %

4. Average or Natural Growth is about 2.5%-3.0% for the US The US is in recovery now but growth is not very high – only about 3.2 % annualized rate last quarter. This means unemployment cannot fall.

5. A Little Theory

7. To reduce unemployment rate by 1%, the US needs to grow at a steady 5% for one year. 1% reduction in the unemployment rate is 1.5 million good stable jobs.

8. It is very difficult for government to create stable new jobs. By definition, the government is trying to use temporary methods to restart the economy. Only private business can create millions of jobs. In fact, most jobs are create by small private businesses.

9. By the way, China is not really stealing all that many jobs from the US. Remember, Treasury Secretary Geithner stated that jobs are being created in US manufacturing.

10. How is the US doing on Unemployment? 2009 9.3 % 2010 9.6 % 2011 January 9.0%

11. US unemployment has been trending downward. Lowest rates of unemployment have been around 4% in 2000. US has been faced with jobless recoveries – this is the case now.

12. Natural Unemployment (5%) (4.6%) Total US Unemployment Rate = 5% + 4.6% = 9.6%

13. One big problem is when people are unemployed too long. 1.Discouraged Workers 2.Underemployed 3.Loss of Human Capital 4.Lack of Experience 5.Crime, Suicide, Divorce, Mental Illness 6.Culture of Dependency

14. When Labor is Unemployed, Other Factors are Usually Unemployed

15. Finally, how about inflation in the US? 2008 0.3% 2009 2.8 % 2010 1.5 %

16. The costs of inflation are not really that high Unanticipated inflation can redistribute income between lenders and borrows. Inflation hurts people on fixed nominal incomes, especially the elderly. Inflation makes it harder for firms to replace depreciated capital. Inflation can increase real tax burdens, if rates are not indexed. Inflation causes firms to waste real resources in re-labeling prices and in forecasting future rates of inflation. Unanticipated inflation can alter exchange rates and increase risk. Inflation is often confused with all important changes in relative prices. Inflation is a surreptitious tax on real money balances. Here is a short list of costs typically mentioned by economists.

17. US inflation has been cyclical with a slight downward trend – however the big fear now is that the US will begin to contract again Three Important Factors to Watch (i)Housing Market (ii)US Federal Budget Deficit (iii)Incipient Inflation