MacroeconomicEnvironment-USDepartmentoftheTreasury.PDFVIP

4 Macroeconomic Environment The U.S. economy expanded at a moderate pace in 2010 and early 2011. The economy is healing slowly from the lingering effects of the extraordinary financial market dislocations in 2008–09 and the severe declines in employment and output (Chart 4.0.1). Businesses have increased investment, and consumers have increased spending (Chart 4.0.2). However, construction and housing demand remain depressed, the unemployment rate is elevated, and the gains in total employment have been insufficient to raise the employment-population ratio. Most foreign economies also continue to Chart 4.0.1 Real GDP Growth and the Unemployment Rate 4.0.1 Real GDP Growth and the Unemployment Rate recover from the most severe global downturn Percent Change – Annual Rate Percent since the Great Depression, albeit at differing 12 12 paces. Emerging economies, which suffered GDP Growth fewer financial disruptions from the crisis, have 8 (left axis) 10 been able to recover more quickly, and many of those economies have returned to or exceeded 4 8 their previous trend growth rate. Recovery in the advanced economies has been slowed 0 6 by the weakness of the financial sector, and many have not yet reached their pre-cri