The Woes of the American Economy

[ad_1]

America, being one of the strongest economies in the world has a definite impact on the rest of the world. It has become imperative to analyze further for a better perspective. The current scenario in the economy is flooded with increasing costs especially in the energy and business sector, leading to inflation. The other leading question pertains to the credit problems of the nation. The outlook of the economy will depend on these two views with strong impacts on the public.
Recession is when there is a contraction GDP for two consecutive quarters. According to the CIA-one of the trusted fact books, the GDP-real growth rate is at 2%, Inflation rate is at 2.96%, Unemployment rate at 4.6%. Over the last few months, the dollar is weak, the consumer spending has slowed down and the real estate sector has taken a bad hit. The unemployment rate has risen to 6.1% in August 2008, though there has been a marginal increase in the rate of the economy to 3.3. %, the productivity rate is strong at 3.4 %. With the Feds fiddling with the interest rates over the last year, their oversight in regulations has led to mortgage meltdown and banks like Lehman Brothers, Merrill Lynch, AIG; along with the rest of the economy is facing a financial crisis. The system seems to have fallen into a habit of privatizing the gains (in the name of executive compensation) and socializing the losses and further, plummeting the economy of the nation.

The government has issued a rescue plan - Emergency Economic Stabilization Act, 2008 to meet the above mentioned challenges in American Economy.

• Energy Issues - Lifting the ban on off-shore exploration, funding on research for alternatives and tax benefits for energy sources like wind, solar, bio mass

• Housing Sector - Refinance into affordable mortgages and HOPE NOW for preventing foreclosure

• Temporary expansion of Federal Insurance for bank and credit union deposits from $100,000 to $250,000. This will reduce the fear of an investor to a larger extent

• Extending key tax credits thus providing more certainty in the tax code

• Aggressive job creation to reduce unemployment

• Prevent failed executives from receiving massive bonus or windfall from tax-payers money.

• Approving pending free trade agreements with Colombia, Panama and South Korea for an increase in exports

• Pass the rescue bill of $700 billion to rebuild capital of the banks, which will increase liquidity and promote businesses

Will this work?
This is the biggest question of all times.
There seem to be hope in certain situations like a safer investment plan up-to
$ 250,000 as cash deposit, 2 million Americans have found an answer to their mortgage problems, and, a reduction in abusive practices in the stock market. The rest remains to be seen as it is compounded by risk, anxiety and uncertainty.
It has become mandatory for the average American to keep a hawk’s eye on the economy and act accordingly, to minimize personal risks and protect from a cash-crash. But, hope lies in the hearts, with the world coming together to support America in its difficult times.

[ad_2]

Source by SearchPooch.com

#ShareKid