Challenges that the United States economy

The U.S. economy is the largest economy in the world with a GDP per capita. However, despite its position as the largest economy, which now faces serious problems of our economy. Some are short term, but some of them reflect a fundamental weakness.

The national government's debt and loans

Because of decades of public debt and national debt of the United States is fast approaching 10,000 million dollars, more than 65% of GDP. The consequence of these high ratesdebt increases the cost of interest payments. It also limits the possibility of future tax cuts and government spending has increased. High levels of debt may also lead to eviction. When the loan from the government to reduce spending in the private sector.

Current account deficit and foreign debt

In the last 2 decades of economic growth in the United States was mainly financed by high levels of consumer spending. This consumer spending has created an increaseimports has not been met by a corresponding increase in exports. At its peak, the current account deficit of the United States has reached 7% of GDP. The current account deficit has been financed by purchases of foreign securities in the United States. This means that the external debt of the United States the majority is held by Chinese, Japanese and other investors. A current account deficit has contributed to the fall of the dollar and remains an obstacle to economic growth

Housing Market

Estimates, U.S. HousePrices fell by 10% over the past 12 months. Although there are many ways to measure statistics on house prices, many people would agree that housing prices in the United States are in decline. A combination of overproduction and falling demand due to uncertainty about the future of the housing market. Falling house prices may be a deterrent to consumer spending. As house prices fall, consumers see their wealth decline, leading to lower economic growth. It is feared that public housingmoney alone could tip the economy into recession.

Low savings rate

The low savings rate is linked to the current account deficit. It is the result of a consumer-led growth. It is also a consequence of increasing levels of personal debt. It is suggested that economic growth was based on a foot indefensible. This means that the American consumer is sensitive to interest rates higher.

Commodity prices

Despite a slowdown in the United Stateseconomy, we have witnessed an increase in cost push inflation. In particular, prices of oil, wheat and soybeans have created problems for the economy of the United States. It could lead to a situation of stagflation - rising prices and growth decline.

A more detailed analysis of the problems afflicting the U.S. economy.

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