Abstract
This research provides a distinctive perspective by analyzing the influence of inflation and increasing oil prices on the economic performance of the United States. Additionally, it takes into account other factors, including unemployment, the exchange rate, and manufacturing output, that may have contributed to the global economic crisis. Secondary data from the World Bank’s annual publication, which spans the years 1990 to 2023, was collected and analyzed for this study. The Johansen co-integration was implemented, which implies that the endogenous series are co-integrated and that it is necessary to specify VECM. We employed the VAR model and VECM, and the results indicate a substantial correlation between the short- and long-term performance of the US economy and the increasing prices of oil, inflation, and other economic factors. According to the OLS regression model, the US economic performance is enhanced by the increase in the crude price and exchange rate, while the inflation rate and manufacturing output have a negative impact. Inflation and manufacturing output have a long-term detrimental impact on the performance of the US economy, according to the FMOLS. As a result, the US government should establish a sustainable monetary policy through policymakers in order to control inflation, which will have a positive impact on the output of US manufacturing. In turn, this will improve sustainable economic performance by assuring consistent affordable housing and a lower overall cost of living, as well as combating other unforeseen economic crises in the United States.
Keywords: Economic Performance, FMOLS, Inflation, Oil Price, OLS Regression, VECM.