FEDERAL AVIATION ADMINISTRATION
U.S. ECONOMIC ACTIVITY
Following an unprecedented fiscal stimulus (i.e., American Recovery and Reinvestment Act or ARRA) of over $800 billion that took place in 2009, with over half of it being spent during 2010, the U.S. economy was left to its own fundamentals in the latter part of 2010 and 2011. The economy grew at an average annual rate of 2.1 percent in fiscal year (FY) 2010 and 2.1 percent in FY 2011. Given the uncertainty that characterized 2011, the economic growth that occurred without a contraction or double-dip recession was reassuring. Towards the end of the fiscal year and beginning with FY 2012, there were signs of pent-up demand coming back as consumer spending continued to grow, the housing market appeared to be finally turning around and the labor market gained traction. Overall, business spending continues growing, perhaps partly influenced by tax incentives and a cautious environment that has kept inventories to a minimum.
The nation’s unemployment rate has been greatly affected by the recession. When the recession began in December 2007 the unemployment rate was 5.0 percent. Unemployment climbed throughout 2008, intensified during 2009, and reached its pinnacle during the first quarter of FY 2010 (10.0 percent). The unemployment rate is gradually falling, from an average of 9.7 percent in FY 2010 to 9.2 percent in FY 2011; this rate of decline is relatively slow compared to past recessions.
The price of oil, as measured by the U.S. Refiners’ Acquisition Cost (for West Texas Intermediate, or WTI), was $96.05 in FY 2011, an increase of 29 percent from FY 2010. This is on top of the last year’s increase of 36 percent. The fuel price volatility that characterized 2008-2009 has diminished considerably but a rising trend appears to be settling in throughout the last two years.
Finally, consumer prices continued to increase in 2011. Core inflation (excluding gas and food) was moderate (2.2 percent); while headline inflation was up a modest 2.6 percent due to an increase in oil and gasoline prices.
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