THE ECONOMY OF THE UNITED STATES

The Economy of the United States



The Economy Of the United States

Introduction of the Economy

The economy of the United States is one of the largest and most technologically powerful in the world with the per capita GDP of $ 36,300. However, the American economy remains competitive throughout the centuries but it has faced many economic problems of Unemployment, Inflation, Poverty and other economic problems. In the market economy, individual enterprises and private businesses are responsible for most of the decisions while federal and state governments buy needed goods and services primarily in the private market. A corporate profit of American business has considerably greater flexibility than their counterparts in Western Europe and Japan. They can take decisions of expanding capital goods, lay off surplus workers, and develop new products. At the same time, corporations face higher barriers to enter the domestic markets of their competitors and entry barriers for foreign companies to enter into U.S. markets. American corporations are on the forefront of technological advances, particularly in computers and medical equipment, aerospace and military, although their advantage has narrowed since the end of the second century of Cold War World.

The race for technology largely explains the gradual development of the two-thirds of the labor market. However, those at the bottom of the ladder did not have the education of professional skills and techniques from those of the top ladder. There is much inequality in wages, health insurance coverage and other benefits. Since 1975, virtually all the gains represented by the income of households affected only the top 20% of households with highest incomes. The years 1994-2000 have demonstrated substantial increases in real output, low inflation and falling unemployment below 5%. The year 2001 witnessed the end of the psychological and performance boom, with output increasing by only 0.3% while unemployment and business failures increasing considerably. The reaction to the terrorist attacks of September 11 showed the remarkable flexibility in the economy. A moderate recovery was expected in 2002 with a growth rate reaching 2.5% of GDP or more. In the short term, the major problem in the first half of 2002 was the sharp decline in financial markets, fed in part by the revelation of questionable accounting practices in some major companies. In the long term, the problems relate to insufficient investment in economic infrastructure, rapidly rising medical costs and an aging population, huge trade deficits, and stagnation of family incomes in the lower economic classes.

Economic Problem in the United States

The current crisis is the worst that the world has known since 1929 and the Great Depression. When comparing the two events, at first glance, the differences go well beyond the similarities, the long depression of ten years from 1929 to 1939, was marked by the incomparable slow down with those that led up to the current crisis after a single year of devastation. During deep depression in 1933, the unemployment rate reached 25% in the U.S., real GDP fell by 26% compared to 1929, ...