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The Economy of the United States of America is of global interest given its significance in the global economy. This has therefore attracted various interest groups of researchers to embark on the study of the macroeconomic situation of America.
Various macroeconomic factors such as inflation, recession, and unemployment just to mention a few have played significant roles in defining the economics of the U.S.A. With the aid of macroeconomic models, forecasts, and functions, economists have been able to evaluate the economic policies of America hence giving a clear picture of the current situation of the American economy.
Of great concern currently is the problem of inflation, which is significantly high. The high inflation is attributed to various factors such as printing of more money by the federal government due to the high amount of bad debt it has. The additionally printed money is then used to buy the bad debts in order to have them settled.
This and other reasons lead to inflation, which is characterized by high cost of living especially for the people in the middle and low social classes (Baily, 2012). In order to deal with the problem of inflation, the federal government could sell treasuries of the United States such as bonds in the international market. This way, the government will get adequate money to pay debt instead of printing money, which could lead to inflation.
The government of the United States of America has managed to create more than 100,000 jobs within the year 2012. However, the current number of unemployed people in the country is over 200,000.
This therefore indicates that the unemployment rate is relatively high, standing at 8.2% and yet to be reduced (North, 2012, p.1). In addition to this, housing costs are still high thus making a large part of the population not able to afford standard housing. Additionally, America has been affected by the high oil prices being experienced in almost all parts of the world.
Nevertheless, it should be noted that the Gross Domestic Product (GDP) is positive but growing at relatively low trends. For instance, the GDP growth in 2012 was only 2%. This GDP growth was as a result of the jobs recovery and stimulus of the fiscal policy that were revived in the current president Obama’s government.
Investment in equipment and software has increased in the current year making most of the businesses to recover from economic distress. This is attributable to the favorable borrowing opportunities put in place by the government through investment banks. On the contrary, the construction industry is performing poorly despite the much effort that the government has put in this sector.
One of the fiscal policies that the federal government should adopt in order to improve the investment sector is providing security to mortgages as a way of attracting more investors in the construction industry (Akhtar, 1997, p.3). This will also spread the risk involved thus making the mortgages attractive for many people in the population.
The aforementioned macroeconomic problems as well as others experienced in the American economy are as a result of internal and external factors affecting the key players of the economy. Internal factors include poor governance and misleading advice from government advisors.
As such, the American government should ensure that they obtain accurate financial advice before implementing it. External factors include those that are influenced by other economies such as increasing oil prices. In most cases, the external factors are uncontrollable thus calling for proper preventive measures to keep the economy stable.
Reference List
Akhtar, M. (1997). Understanding Open Market Operations. Public Information Department, Federal Reserve Bank. Web.
Baily, M. (2012). The Economic Situation in the United States: Growth, Deficits, and Financial Reform. Web.
North, D. (2012). Economic Outlook- As of May 2012. Web.
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