The Current State of the U.S. Economy
The United States economy is racing ahead at dangerous speeds, and it may be too late to prevent the return of widespread inflation. Ideally the economy should move ahead gradually and grow at a steady manageable rate. Mae West once stated “Too much of a good thing can be wonderful” and it seems the U.S. Treasury Secretary agrees. The Secretary announced that due to our increasing surplus and booming economy, instead of having an outsized tax cut, we should use the surplus to further pay down the national debt. A tax cut, though most Americans would favor it initially, would prove counter productive. Cutting taxes would over stimulate an already raging economy, and enhance the possibilities of an increase in the rate of inflation. Paying off the national debt would actually help lower interest rates and boost investments, and therefore further increase the wealth of the population, while keeping inflation at bay.
It seems Federal Reserve Chairman Alan Greenspan beat the Treasury secretary to it. Greenspan could not wait for the economy to fix itself by paying of the debt. The United States economy is roaring ahead at about 5% annual growth rate, much faster then the federal reserve considers safe. In an attempt to keep inflation under wraps and fix the imbalance of the economy, the Federal Reserve raised federal fund rates half a point, overnight, to 6.5%, the highest in nine years. However the fed is not sure this wil...
... strength of imaginary wealth, the government bubble (mortgages and bonds) is propping us up now. The pressure within the bubble will grow so great that the Fed will soon only have two options – 1. Finally contract the money supply and let interest rates spike -- which will cause immensely more pain than if we let this happen in 2002 or 2008, or 2. Keep pumping more dollars into the economy, causing hyperinflation and all the evils that come with it. The politically easier choice will be the latter, wiping out the dollar through hyperinflation. The grown up choice would be the former, electing for some painful tightening, which will also entail the federal government admitting that it cannot fulfill all the promises it has made, and it cannot repay everything that it owes. Regardless, well get the big crash. The longer we wait, the bigger the explosion will be.
The United States is the leading economy across the globe and experienced several tribulations in the recent past following the 2008 global recession. Despite these recent challenges, there are expectations among policymakers and financial experts that the country will experience solid economic growth. Actually, financial analysts have stated that the U.S. economy will be characterized by increased consumer spending, increased investments by businesses, reduced rate of unemployment, and reduction in government cut. Some analysts have also stated that the country’s economy will strengthen in 2014 with an average of 2.7 percent or more. However, these predictions can only be understood through an analysis of the current macroeconomic situation in the United States.
Every day in New York City, hundreds of people walk past a huge digital billboard with giant numbers across its face. Each person who walks past this billboard sees a slightly different arrangement of numbers, growing larger every second. This board is the National Debt Clock, representing the over 14 trillion dollars currently owed by the United States. While some people claim that the national debt is caused by the falling economy, most maintain that the debt itself causes the poor economy (Budget Deficits 2007). Rising debt leads to higher interest and investment rates, and cuts into our national savings. Ignoring the national debt leaves the major burden of paying it off to later generations, while meanwhile allowing our country’s economy to further drop and our dependency on other nations to rise.
What at first seemed to be an economic slump turned into a brutal crisis, and all eyes looked to the Government and Federal Reserve to help the economy. With the large amount of debt the economy faced the Federal Reserve stepped in and bailed out the banks in an attempt to smooth over the financial struggles of the economy. The banks that survived took precautionary measures, making it difficult for businesses and consumers to borrow (Love, 2011). Thus leading to businesses failing and less jobs being created. The large amount of debt had also taken its toll on the job market. Between 2007 and 2009 employment dropped by 8 million workers, causing the unemployment rate to go from 4.7 percent to 10 percent (McConnell, 2012).
Between January 2008 and February 2010, employment fell by 8.8 million, the largest decline in American history. The 2008 Recession, which officially lasted from December 2007 to June 2009, began with the bursting of an 8 trillion dollar housing bubble. Job losses during the recession meant that family incomes dropped, poverty rose, and people all over the country were suffering. Things like this don’t just happen. Policy changes incorporated with the economy are often a major factor. In this case, all roads lead to one major problem: Deregulation. Deregulation originating from the Carter and Regan Administrations, combined with a decrease in consumer spending, and the subprime mortgage bubble all led up to the major recession of 2008.
It is to my belief that no one can possibly predict the future of the economy. Because of this we are faced with many questions that cannot be easily answered. Will the economy recover drastically or simply continue to increase moderately? Or could the economy in turn go into a recession? “There's been plenty of good news about the U.S. economy… employment is expanding (2.4 million new payroll jobs in the last year); inflation remains low (less than a 2 percent rate in the past quarter); the stock market is higher (up 11 percent on the Dow from its November low), and business investment is impressive (rising at a 14 percent rate in late 2004).” (1) It is my opinion that unless something drastic happens in the world today, positive or negative, the economy will continue to increase at a modest rate. Even though no one quite knows which way our economy is heading, there are many economic concepts designed to help measure positive and negative changes that can show us how well we are or are not doing. These concepts include examples such as gross domestic product (GDP), business cycle, and unemployment rate.
According to askheritage.org the Washington Post reported that the national debt is no longer unsustainable. It seems like national debt is not government’s high priority anymore. However, there are plenty of reason why reducing the national debt should be the most urgent problem that the president and congress should address in 2017. The effect that the national debt can have on the economy is tremendously impactful. Cost of living will rise because the government will find a way to collect money by putting higher interest rate on anything from credit card from house mortgage. There will be a generational inequality because by not being responsible for the current generation’s debt, people are giving burden of reducing debt to our next generation which will threaten their standard of living and retirement plan. It cause slower wage growth. Instead of making productive investments, money goes to buying government debt. The debt have huge impacts on fiscal policy. Economicshelp.org defines fiscal policy as a policy involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand (AD) and the level of economic activity. The federal debt cause reduction of fiscal flexibility. Between 2008 and 2013 the GDP increased from 35 percent to 70 percent due to the Great Recession. Because of high debt, our government is not
The United States economy is, historically, the largest national economy in the world, a title which it still holds today. The current gross domestic product for the United States is estimated to be at around $17.37 trillion. (Y Charts) This number is up from last month, which was $17.30 trillion. (Y Charts) This figure represents a monthly annualized growth rate of 4.88%, compared to a long term average annualized growth rate of 4.63%. (Y Charts) The United States gross domestic value is almost a quarter of the global nominal GDP. For the most part, the United States economy has remained stable, despite recent economic crisis that afflicted the country in 2008. Different sectors of the US economy such as interest rates, inflation and
The American economy is a vibrant, free-market system that is constantly developing out of the choices and decisions made by millions of citizens who play multiple, often overlapping roles as consumers, producers, investors and voters. The changes in the organization and performances of the manufacturing industry over the last century have helped shape the American economy. The Automotive industry perhaps made the biggest changes to their manufacturing processes. I will be reviewing the role of the industrialist Henry Ford and his innovative methods that changed the organization and performance of the American manufacturing industry forever. He produced an affordable car, paid high wages and helped create a middle class, which in turn fueled the America Industrial revolution into overdrive mode. I will also review the impact of these performance and organizational changes on the service sector and the agricultural industry. But first we look at the automotive industry.
Like any other country, United States is also facing problems like unemployment and poverty. The main reason behind these problems is the unequal distribution of wealth among individuals, A small number of people held a large proportion of the nation’s wealth while others fell into poverty, which is creating large gap between rich and poor where an ideal economy consists of more middle class groups. The powerful corporate institutions mostly dominate our economy and as well as our political system. United States economy is one of the best economies in the world yet it is facing problems like any other country and more problems are yet to come which may cause the economy to collapse. Economy collapse leads to number of problems such as the value of a dollar will become an almost useless form of currency, Supply chains will fail very few people will be willing to accept payment in dollars, the collapsed dollar makes imports very expensive and exports very cheap, rising import costs will likely lead to hyperinflation and there will be shortages of goods including basics such as food and oil.
In order to assess the current state of the economy, the examination of important economic indicators or variables has always played a vital role in the understanding of the complex economic systems we live in. The analysis of these economic variables studied by many, not only has served as a tool to evaluate the current economic performance of a country, but also has allowed experts to envisage and continue the pavement of an economy's road. Currently, some economic variables have had favorable improvements indicating a general good outlook for the economy for the following months, requiring a further individual analysis and comparisons in order to foresee crisis or successes.
We the people of America have the right to make changes if we choose too. America as we know it, is going down the drain. The economy, war of terror, and unemployment are some major issues America is having. As we speak these issues are gradually developing more and more. As Americans we have always managed to adapt and overcome and that’s what we’ll have to do to conquer these issues.
...ronted with an increasing deficit that should not be continued for an indefinite period. The deficit carried by the United States has been scrutinized by global leaders who are pushing for the dollar to be replaced as the world reserve currency. No matter what policy changes are made, any change will have a negative impact on the United States economy. The United States has no lived within its means for several decades, which is the direct cause of the large deficit. Instead of continuing to ignore the deficit it is time the United States takes responsibility for their actions and faces the consequences. The first step would be for the United States to stop using stimulus packages and bailouts to intervene with economic cycles. The citizens of the United States do not want to experience another Great Depression, but this may be the best option at this time.
GDP is above 4 per cent p.a. it would be considered a boom year and
The challenging, new economic and financial environment with the growing frequency of financial crises in Turkey has made me intrigued to understand more about the (well-)functioning of an economy in general and the role, which financial market and institutions take on in this economy, in particular. The theory of financial crises; the factors and forces leading to the emergence of debt and financial crises; the requirements for the development of a sound and efficient domestic financial sector have therefore been interesting subjects to come to grips with.