US Economy - Essay Example

Download file to see previous pages... The economy of the United States in the past few years has gone through a major slump. This slump has been seen through their real estate crisis, rise in unemployment rates, and their reduced competitiveness in the global economic setting.This economic crisis was not helped by the matching economic crisis felt in other western nations as well, such as the United Kingdom, Australia, Japan, and similar developed nations. In so many ways, this crisis has been a result of the rise in oil prices which has affected the general prices of commodities and the transport of people and goods from one place to another. Much analysis is needed in order to fully comprehend the US economic crisis. This paper shall now analyze, compare, contrast the economic growth, unemployment, and inflation rates in the United States. This paper is being conducted in order to establish a dynamic and academic understanding of the topic, as well as its implications to the country’s progress. Discussion The US remains to be the world’s largest economy. Based on the CIA Factbook, their 2007 GDP was at $13.84 trillion which represents three times the size of the next largest economy which is Japan at $4.4 trillion (Economy Watch). With the creation of the European Union however, the dominance of the US was reduced with the European market presenting an equivalent of $13 trillion. The growth of the BRIC (Brazil, Russia, India, and China) has also threatened the US global dominance with China forecast to overtake the US in size in the next 30 years (Economy Watch). These are imposing threats on the US economy which have also been plagued by the housing crisis. The failure of the US housing and credit markets caused a major slowdown in the US economy with the 2007 GDP growth being 2.2%, plunging down to 0.9% in 2008. This represents a significant decrease in the GDP when the 10 year average was at 2.8% (Economy Watch). Similar to developed nations, services have been considered an important element of the US economy. In 2007, services comprised 78.5% of the GDP, the industry represented 20.5% and agriculture represented less than 1% (Economy Watch). About two thirds of the country’s total production has been dictated by personal consumption. And even as it is an economy which is considered free market, government regulations still protect some aspects of their economy like energy and agriculture (Economy Watch). In any case, it can instead be considered a consumer economy. As the largest economy in the world, the US consumer dictates about two thirds of the economy and is a major driver in the global market (Economy Watch). It is also driven by the basic interplay of supply and demand which dictates the prices of goods and services. The impact of the government in the US economy is important in terms of monetary decision making and fiscal policy conceptualization. The federal government considers all the possible initiatives in order to guarantee the growth of the US (Economy Watch). The US government considers all economic tools, including money supply, taxes, and credit control in order to make the corresponding adjustments in economic growth. During such considerations, the US federal government has also been tasked to regulate the operations of private business concerns in order to control monopolies (Economy Watch). The government provides different services by giving support for national defense, monetary aid for research and development programs (Economy Watch). The national debt is one of the most controversial issues in the US. In 2008, its federal debt was at $9.2 trillion. This represents 67% of GDP and is about $79,000 for each American taxpayer (Economy Watch). American consumers have also become dependent on debt and re-mortgaging to higher loans while using their extra cash to fund their high purchases. Their debt totals are one of the largest in the world; however in terms of GDP percentages, it is still less than Japan and other European countries. Moreover, much of the debt is ...Download file to see next pagesRead More