United States Economic Situation Essay Example for Free

United States Economic Situation EssayThe US has the largest and most technologically powerful economy in the world, with a per capita gross domestic product of $49,800. In this market-oriented economy, private individuals and line of work firms make most of the decisions, and the federal and state g everyplacenments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop recent products. At the same time, they face higher barriers to enter their rivals home markets than foreign firms face entering US markets. US firms are at or effective the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment their advantage has narrowed since the end of World War II. The onrush of technology for the most part explains the gradual development of a two-tier labor market in which those at the bottom lack the education and the professional/technical skills of those at the top and, more(prenominal) and more, fail to get comparable pay raises, wellness insurance reporting, and other benefits.Since 1975, practically all the gains in household income have gone to the top 20% of households. Since 1996, dividends and capital gains have grown faster than wages or any other category of after-tax income. Imported oil accounts for nearly 55% of US consumption. unsmooth oil prices doubled between 2001 and 2006, the year home prices peaked higher gasoline prices ate into consumers budgets and many individuals fell behind in their mortgage payments. oil colour prices climbed another 50% between 2006 and 2008, and bank foreclosures more than doubled in the same period. In addition to dampening the housing market, soaring oil prices caused a drop in the value of the dollar and a deterioration in the US merchandise trade deficit, whic h peaked at $840 billion in 2008. The sub-prime mortgage crisis, falling home prices, investment bank failures, tight credit, and the global economic downturn pushed the United States into a recession by mid-2008.GDP contracted until the ternary quarter of 2009, making this the deepest and longest downturn since the Great Depression. To help stabilize financial markets, in October 2008 the US Congress established a $700 billion dissolute Asset Relief Program (TARP). The government used some of these funds to purchase equity in US banks andindustrial corporations, much of which had been returned to the government by early 2011. In January 2009 the US Congress passed and President Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years two-thirds on additional spending and one-third on tax cuts to create jobs and to help the economy recover. In 2010 and 2011, the federal budget deficit reached nearly 9% of GDP. Wars in Iraq and Afgh anistan required major shifts in national resources from civilian to military purposes and contributed to the growth of the budget deficit and public debt.Through 2011, cover costs of the wars totaled nearly $900 billion, according to US government figures. US revenues from taxes and other sources are lower, as a percentage of GDP, than those of most other countries. In March 2010, President OBAMA signed into law the Patient vindication and Affordable Care Act, a health insurance reform that will extend coverage to an additional 32 million American citizens by 2016, through private health insurance for the general population and Medicaid for the impoverished. Total spending on health care public plus private rose from 9.0% of GDP in 1980 to 17.9% in 2010.In July 2010, the president signed the DODD-FRANK Wall Street Reform and Consumer Protection Act, a law designed to promote financial stability by protecting consumers from financial abuses, ending taxpayer bailouts of financial firms, dealing with troubled banks that are excessively big to fail, and improving accountability and transparency in the financial system in particular, by requiring certain financial derivatives to be traded in markets that are motif to government regulation and oversight. Long-term problems include stagnation of wages for lower-income families, inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an senescent population, energy shortages, and sizable current account and budget deficits including significant budget shortages for state governments.