ECONOMIC GROWTH

Economic Growth

Economic Growth

Introduction

The article, “The Simple Math of Recession”, discussed here has been taken from The Washington Post. It highlights the events and inaccuracies that caused the recession in the U.S economy. It also reflects on the course of action that the government is devising to counter the downturn. It states how consumers are becoming increasingly reluctant when it comes to spending and how companies have also been forced to reduce their workforce drastically. The article sheds light on the ever-expanding gap between United States' government and consumers and the matter of unemployment.

Analysis

Economy in the United States has been suffering since the 2007 financial crisis hit the world. Currently, the U.S' economy appears to be heading toward revival with multiple factors showing progress. According to the author, the economy cannot fall any further (Irwin, 2011). The policies and procedures that have been devised have political interests vested in them. The elite are still refusing to pay their share of taxes. The government on the other hand, is seeking to impose new taxes on the public. This paradox has raised eyebrows all over. Indicators such as loans for housing and spending on consumer goods have taken a dive.

This shows appalling the current economic situation in the United States of America is. The 2007 crisis has led to demotion, and at times, relegation of loans and securities that had been extended to borrowers in financial markets. The United States government has lost its spectacular rating that it enjoyed prior to the crunch. As a result, companies were forced to downsize, reducing their number of employees significantly (Irwin, 2011).

The issue of unemployment has sparked a heated debate in Congress. The recent Jobs Bill was turned by the Republicans. This reduction created unemployment that led to more people applying for the unemployment benefits program. Reading from this article, I believe is that the unemployment trend will continue to rise. Liberals and Republicans have their own interests to worry about. Citing the example given in the article, it can be understood that consumers are losing confidence and becoming skeptical of the prevailing situation (Krugman, 2011). One of the most significant reasons is that investors and consumers feel betrayed by agents at Wall Street.

This feeling is a result of exploitation of discrepancies in the U.S financial system. The idea of a free market has been one the biggest reasons why the U.S is facing the worst economic downturn since the Great Depression. What many experts believe is that the U.S needs to regulate its markets to have a degree of control over investments and loans extended to borrowers. The economic boom proved to be a farce. Republicans and Democrats have been held liable for the downturn. Corporations, such as Lehman Brothers, exaggerated securities' ratings to lure investors into spending their savings. With consumers now out of savings, the government had contemplated revising its monetary policy by increasing the money supply. Any such change in policy would fuel inflation ...