An Overview Of The Us Economy Economics Essay

The United States of America ( US or USA ) has the universe ‘s largest economic system. Harmonizing to the CIA World Fact book, 2007 GDP is believed to be $ 13.84 trillion. This is three times the size of the following largest economic system, Japan, which has a GDP of $ 4.4 trillion. US laterality has been eroded nevertheless by the creative activity of the European Union common market, which has an tantamount GDP of over $ 13 trillion, and by the rapid growing of the BRIC economic systems, in peculiar China, which is forecast to catch the US in size within 30 old ages. The recent failure in the US lodging and recognition markets have resulted in a lag in the US economic system. 2007 GDP growing was estimated at 2.2 % but in 2008 it is projected to be merely 0.9 % , down from the 10-year norm of 2.8 % … ( Economy Watch ; 2010 )

Soon the universe ‘s top most economic system ‘s failures are besides more clear when we go through IMF ‘s study on the economic system which is detecting a record-low family salvaging rate and a big federal financial shortage Thus it is indispensable to back up the accommodation by strong US national economy to avoid a load falling on investing and growing, both in America and abroad. ( Maps Of World ; 2010 )

Beginning: ( Board of governors of the federal modesty system,2010 )

Definition of ‘Economy ‘

Harmonizing to Fernando ( 2010 ) Economics is concerned with the efficient usage ( or direction ) of the limited productive resources to accomplish maximal satisfaction of human stuff wants.

A states development largely depends on its economic system. Every life being on this planet has their demands.

These demands could be categorized as follows.

Basic indispensable demands

Complementary demands.

Out of these 2 chief demands, it is a must for people to hold the ‘basic indispensable demands ‘ in order to last.

So the chief purpose of any authorities is to carry through the basic demands of the citizens of their state. a states

economic system or instead the position of its economic system plays a large portion in enabling the authorities to carry through these demands.

Beginning ; ( Authors ‘ work )

Main Economical factors that a states economic system depends on ; –

Economic Growth Rate.

Discretionary income.

Unemployment rate. ( Low/High )

Inflation rate.

Interest rate.

Exchange rates of host state currency.

Beginning ; ( Authors ‘ work )

When rising prices affects an economic system, to keep the same degree of life criterions you would hold to pay more. That is you would hold to pay more for same sum of goods and services you had used prior to rising prices. Remember, your income may non increase at the same rate as rising prices. ( Buzzle ; 2010 )

Unemployment is a macroeconomic phenomenon that straight affects people. When a member of a household is unemployed, the household feels it in lost income and a decreased criterion of life. There is small in the kingdom of macroeconomics more feared by the mean consumer than unemployment. Understanding what unemployment truly is and how it works is of import both for the economic expert and for the consumer, as it is frequently discussed. ( sparknotes ; 2010 )

THE RAPID DECLINE OF THE US ECONOMY

Although the united provinces of America is considered to be the state which has the largest economic system, it is get downing to worsen quickly during these twosomes of old ages. The chief ground for this is due to the addition of certain economical factors such as ‘UNEMPLOYMENT RATE ‘ , ‘INFLATION RATE ‘ and ‘INTEREST Rate ‘ . Beginning ; ( Authors ‘ work )

Unemployment rate of America

Year

Unemployment rate

Rank

Percentage Change

Date Of Information

2003

5.80 %

141

2002

2004

6.00 %

137

3.45 %

2003

2005

5.50 %

48

-8.33 %

2004 est.

2006

5.10 %

52

-7.27 %

2005 est.

2007

4.80 %

56

-5.88 %

2006 est.

2008

4.60 %

63

-4.17 %

2007 est.

2009

7.20 %

91

56.52 %

December 2008 est.

( Index mundi, 2010 )

Beginning ; ( Authors ‘ work )

Evidence for the high unemployment in USA

METROPOLITAN AREA EMPLOYMENT AND UNEMPLOYMENT — JANUARY 2010

Unemployment rates were higher in January than a twelvemonth earlier in 363 of the 372 metropolitan countries, lower in 7 countries, and unchanged in 2 countries, the U.S. Bureau of Labor Statistics reported today. Thirty-five countries recorded idle rates of at least 15.0 per centum, while 2 countries registered rates below 5.0 per centum. The national unemployment rate in January was 10.6 per centum, non seasonally adjusted, up from 8.5 per centum a twelvemonth earlier. Among the 371 metropolitan countries for which nonfarm pay-

axial rotation informations were available, 346 countries reported over-the-year lessenings in employment, 24 reported additions, and 1 remained unchanged. ( Bureau Of Labor Statistics ; 2010 )

By holding unemployment in a state, a economic system could derive chances every bit good as suffer the effects by its menaces. But largely unemployment leads to the ruin of a states economic system. Beginning ; ( Authors ‘ work )

What is unemployment?

Harmonizing to Fernando ( 2010 ) unemployment can be defined as ;

The proportion of the labour Force ( LF ) that is unemployed ( U ) .

The more people are unemployed the more companies or organisations could engage labour for a minimal cost. This factor helps organisations to cut down or cut their budget in half, comparing with the disbursals it takes them to engage an employee. This can be considered as a chance of ‘UNEMPLOYMENT ‘ . Beginning ; ( Authors ‘ work )

But when a labourer is hired and given a cheaper wage the working efficiency of the certain labourer beads, the organisation or company can non acquire the maximal out of him/her. besides due to the low literacy degree of the labourer who works for a cheaper salary the full company is been put at hazard. These disadvantages of the certain labourer decreases the productiveness of the company, finally ensuing in the ruin of the company. So these could be considered as menaces of ‘UNEMPLOYMENT ‘ . Beginning ; ( Authors ‘ work )

High Inflation Rate In America

Us rising prices from 2003 – 2009: –

Year

Inflation Rate ( Consumer Monetary values

Rank

Percentage Change

Date Of Information

2003

1.60 %

178

2002

2004

2.30 %

143

43.75 %

2003

2005

2.50 %

81

8.70 %

2004 est.

2006

3.20 %

98

28.00 %

2005 est.

2007

2.50 %

57

-21.88 %

2006 est.

2008

2.90 %

77

16.00 %

2007 est.

2009

3.80 %

56

31.03 %

2008 est.

( Index mundi, 2010 )

Beginning ; ( Authors ‘ work )

Healthcare Bill to Cause U.S. Hyperinflation By 2015

The cost of the health care measure and lifting involvement payments on our national debt, another major accelerator for hyperinflation will be societal security payments, which adjust to the CPI-index. As the authorities ‘s CPI-index rises, so will the societal security payments that it owes. This could do a death-spiral in the U.S. dollar. Inflation is still the last thing on the heads of most Americans, but shortly it will be their primary concern. ( National rising prices association ; 2010 )

What is rising prices?

Inflation is described as continuously lifting monetary values, or the uninterrupted autumn in value of the dollar.

Menace

As the rising prices rises the disbursals on indispensable demands rise.

The measure of gross revenues degrees bead.

Production degrees of concerns autumn, and client demand decreases.

Imports rise and exports lessening, ensuing in the ruin of many concerns.

( Us rising prices reckoner ; 2010 )

Beginning ; ( Authors ‘ work )

Interest Rate Of The State

Definition: – A rate which is charged or paid for the usage of money. An involvement rate is frequently expressed as an one-year per centum of the principal. ( Investor words ; 2010 )

( Federal modesty, 2009 )

United States Interest Rate

The United States benchmark involvement rate bases at 0.25 per centum. In the United States, authorization for involvement rate determinations is divided between the Board of Governors of the Federal Reserve ( Board ) and the Federal Open Market Committee ( FOMC ) . The Board decides on alterations in price reduction rates after recommendations submitted by one or more of the regional Federal Reserve Banks. The FOMC decides on unfastened market operations, including the coveted degrees of cardinal bank money or the coveted federal financess market rate. ( Trading economic sciences ; 2009 )

How Interest Rates Affect the U.S. Economy

Interest rates affect the economic system easy. When the Fed changes the Fed Funds rate, it can take 12-18 months for the consequence of the alteration to leach throughout the full economic system. As rates increase, Bankss slowly lend less, and concerns easy put off enlargement. Similarly, consumers slowly realize they are n’t every bit affluent as they one time were, and put off purchases. ( US economic system ; 2010 )

Opportunities & A ; Threats of Lower And Higher involvement rates: –

OPPERTUNITES

Menace

Lower involvement rates Encourages houses to put more

Higher involvement rates tend to deter houses to put

Cost of loans decrease

cost of loans additions

Encourages ingestion

Discourages ingestion

Rise of disposable income

Disposable income falls

Source= ( Authors ‘ work )

Apart from these 3 chief factors, there were other factors which contributed in the downswing of the us economic system every bit good. For illustration the GDP and the exchange rates. Beginning ; ( Authors ‘ work )

GDP Of The USA

Definition Of GDP: – This is the entire value of all of a state ‘s goods and services that were produced in a twelvemonth. ( Useconomy ; 2010 )

GDP Of The USA 2003 -2009: –

Year

GDP- ( Real Growth Rate )

Rank

Percentage Change

Date Of Information

2003

2.45 %

115

2002 est.

2004

3.10 %

104

26.53 %

2003 est.

2005

4.40 %

100

41.94 %

2004 est.

2006

3.20 %

138

-27.27 %

2005 est.

2007

3.20 %

152

0.00 %

2006 est.

2008

2.00 %

186

-37.50 %

2007 est.

2009

1.10 %

171

-45.00 %

2008 est.

( Index mundi, 2010 )

Beginning ; ( Authors ‘ Work )

Exchange Ratess

Definition Of Exchange Ratess: – This entry provides the official value of a state ‘s pecuniary unit at a given day of the month or over a given period of clip, as expressed in units of local currency per US dollar and as determined by international market forces or official decree. ( Index mundi, 2010 )

Decline of the US dollar

the dollar declined 40 % between 2002-2008. The dollar strengthened during the recession, as investors sought a comparatively safe oasis. Since March 2009, nevertheless, the dollar has resumed its diminution. This is a consequence of the $ 11 trillion U.S. debt. Creditor states believe that the U.S. authorities is non back uping the value of dollar. ( Useconomy ; 2010 )

Year

Sum it took to

A

equal $ 1 in 1913

1913

$ 1.00

1990

13.2

1995

15.39

2000

17.39

2001

$ 17.89

2002

18.17

2003

18.59

2004

19.08

2005

19.73

2006

20.18

2007

20.94

2008

21.57

( Infoplease, 2009 )

Beginning ; ( Authors ‘ work )

Social analysis

Social analysis is done by sing the below factors.

Work forms

Education.

Leisure.

Health.

Demographics.

Attitudes.

Spending wonts.

Beginning ; ( Authors ‘ work )

Some societal issues that America faces today

Unsuccessful educational system.

Poverty.

Failing to administer wealth every bit.

Bad wellness attention system Source ; ( Authors ‘ work )

Educational issues: –

The NAAL ( National Assessment of Adult Literacy ) administered trials which revealed that an estimated 14 % of US occupants would hold utmost trouble with reading and written comprehension. These people can lawfully be defined as nonreader. This could take to legion jobs for these people now and in the hereafter. When looking to use for a occupation, there are signifiers that have to be filled out. Adults with literacy issues are unable to make full out these signifiers which decrease their opportunities of acquiring a occupation and raises unemployment issues.

( Caliteracy ; 2008 )

( Calvert-henderson, 2010 ) ( Calvert-henderson, 2010 )

These Are the Opportunities If Education Level Is High: –

Inability of the people to take determinations more expeditiously.

Less confusion between the employees

The employees with a higher literacy degree ever contributes more towards a companies development.

Good communicating within the organisation occurs

Beginning ; ( Authors ‘ work )

‘Health attention ‘ of the us

Healthcare is one of the top societal and economic jobs confronting Americans today. The lifting cost of medical attention and wellness insurance is impacting the support of many Americans in one manner or another. The inability to pay for necessary medical attention is no longer a job impacting merely the uninsured, but is progressively going a job for those with wellness insurance every bit good.

( Health attention jobs ; 2010 )

( The New York Times, 2010 )

Demographics of the state

One of the chief disadvantages United States has is its addition of the population. since United States has the universes

Largest economic system it should n’t ache the state that much, but the recent downswing in the states

Economy has changed all of this. The authorities can non non get by with limitless outlooks

Of its citizens, by merely utilizing the limited figure of resources the state has. This has lead the

Government to increase the cost of revenue enhancements, which fundamentally affects the full construction of the economic system.

Beginning ; ( Authors ‘ work )

The Increase Of USA ‘S Population Since 2003

Population: –

Year

Population

Rank

Percentage Change

Date Of Information

2003

290,342,554

3

July 2003 est.

2004

295,734,134

3

1.86 %

July 2005 est.

2005

295,734,134

3

0.00 %

July 2005 est.

2006

298,444,215

3

0.92 %

July 2006 est.

2007

301,139,947

3

0.90 %

July 2007 est.

2008

303,824,640

3

0.89 %

July 2008 est.

2009

307,212,123

3

1.11 %

July 2009 est.

( Index mundi, 2010 )

Beginning ; ( Authors ‘ work )

Work Forms

The work forms of organisations is really of import, for illustration in the past people had free clip to

Relax their head. so they improved rapidly but with the development of scientific discipline and engineering

Peoples have less clip to loosen up, ensuing in different sorts of physical as good mental complaints.

This has decreased the efficiency degree of the employees doing them inactive and doing them

contribute less towards the organisations development.

Beginning ; ( Authors ‘ work )

( Internet Mental Health, 2010 )

Decision

The Topics Which Are Discussed: –

Economic FACTORS.

SOCIAL FACTORS.

Economic factors: –

Sub factors

Unemployment Rate.

Inflation rate.

Interest rate.

GDP

Exchange rate

Social factors: –

Sub factors

Education

Health

Demographics

Work forms

Beginning ; ( Authors ‘ work )

OPPERTUNITIES AND THREATS OF ECONOMIC FACTORS

Economic Factors

Opportunities

Menaces

Unemployment rate

Less money is spent to engage Unemployed workers.

Cuts the company/organizations disbursals in half.

Could take to the failure of the company

Can non anticipate much from the employees.

Hard to pass on due to low literacy degree.

Inflation

Monetary values of indispensable demands addition.

Production degree diminutions

Gross saless degrees bead

Interest rate

Brands houses to put more.

Cost of loans lessening.

Higher involvement rates decreases disposable income

Cost of loans addition, doing the house invest less.

Beginning ; ( Authors ‘ work )

Social Factor

When Education degree is high

When Education degree is low

Education

Efficient determination devising occurs

Less confusion between employees.

Ability to lend more to the company or organisation

Good communicating between employees

Can non take duty even for the simplest of things.

Low literacy degree causes enormous confusion.

Unable to get by with the twenty-four hours to twenty-four hours work of the company.

Beginning ; ( Authors ‘ work )

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