How US economy faired in last 1 year as QE2 ends

Quantitative Easing 2, which was released an year ago when US needed to pump in money to save its economy, has completed its lifetime. Now since QE2 has ended, everyone is analyzing the affects it had on US economy. Here are few parameters to check how US economy did in past one year.

1. Mass Layoff

mass layoff

The number of mass layoff events in April was 1,750, not seasonally adjusted, resulting in 189,919 initial claims. The number of mass layoff events was down by 90 from April 2010, and associated initial claims decreased by 9,771.

2. Inflation

inflation US

This was a sure positive outcome of QE2. US economy’s CPI which was negative around an year ago is now positive and saved the economy from spiraling deflation during the peak time of recession.

3. Productivity and labor cost

productivity

 

Unit labor costs in nonfarm businesses rose 1.0 percent in the first quarter of 2011, as a 2.6 percent increase in hourly compensation outpaced the 1.6 percent gain in productivity.  Unit labor costs rose 1.2 percent from the same quarter a year ago. In the first quarter of 2011, the consumer price index increased at a 5.3 percent annual rate, resulting in a decline of 2.5 percent in real hourly compensation.

Manufacturing sector productivity grew 6.3 percent in the first quarter of 2011, as output and hours worked increased 9.7 percent and 3.3 percent, respectively.  Over the last four quarters, manufacturing productivity increased 4.7 percent.  Unit labor costs in manufacturing declined 3.5 percent in the first quarter of 2011 and 1.4 percent over the last four quarters. 

4. Unemployment

unemployment us

The number of unemployed persons, at 13.7 million, changed little in April. The unemployment rate edged up from 8.8 to 9.0 percent over the month but was 0.8 percentage point lower than in November.
The labor force also was little changed in April. Among the major worker groups, the unemployment rates for adult men (8.8 percent), adult women (7.9 percent), teenagers (24.9 percent), whites (8.0 percent), blacks (16.1 percent), and Hispanics (11.8 percent) showed little change in April. The jobless rate for Asians was 6.4 percent, not seasonally
adjusted.

Clear affects of QE2 may not be visible or we can say QE2 can not be the only reason for changes in US economy over the year, there are many other global factors that worked as well. But we can say that QE2 could provide some resistance to the down sliding momentum of the US economy and helped saving it from collapse. It has also caused more dent to the balance sheet of the US economy which will have to be repaired soon.

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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