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USA Economy

USA Economy

5 years ago, the economy of the United States had been sailing on rough waters. During the swearing in of a new president, Barrack Obama, the nation was cringing in the fate of unknown. The rate of unemployment was high, and the nation was also experiencing negative changes in the housing sector. This triggered a financial crisis in the market, and there was a credit card crunch. This made it almost impossible for customers and financial institutions to borrow. As a result, many people and organizations plans were jeopardized. Financial institutions and banks responded to this defect by scaling back their spreadsheets and ledgers and withholding from lending. The result was a national retrenchment as institutions and individuals pulled back, creating a loophole of national unemployment. As if this was not enough tragedy for the nation, prices on essential commodities such as oil also escalated. This was the year 2008. This resulted in inflation and worried consumers. Unemployment was on the rise, and as a result, an upsurge concern about the economic strength of such a great nation was in question. This was a matter of concern to both the federal and local governments.

The road to recovery for the nation has not been a smooth ride. Despite the fact that various strategies have been laid down to ensure that the nation is not crippled by the internal and external debts, it is evident that the hole that the economic crisis led the United States into is an endless pit. In 2007, the unemployment rate in the nation was 4.6%. This is a stark contrast to the statistics of 2012 that illustrated that the current unemployment rate had reached an alarming 7.5%. This had almost doubled the rate 5 years ago. Despite the optimism of many that the economy is stabilizing, the statistics are saying otherwise. Since figures don’t lie, it is evident that the economy of the nation is in jeopardy. Though the GDP of the nation may show an increased and more stable nation, the living conditions per head in the country are contrary to this. The outcry on Wall Street illustrates that the majority are not satisfied with the decisions of federal governments. The inflation rate of the US came to an end in October 2012 after 12 months. Statistics reveal a 0.11% increase in the rate of inflation as compared to the prior month. The most affected sectors of the economy were the following; food and beverages, energy, transport and communication, housing, recreation and medical care. However, compared to five years ago when the worldwide economic crisis struck, there has been a shift in the inflation rate. It is worth noting an improvement in the reduction of the prices of oil and other consumer-related goods. This cannot be attributed to the stabilizing of the economy but has been caused by the instability of other international, more industrialized companies such as countries in the European Union.

Reduction in the worldwide demand for certain commodities should relieve the United States from the pressure it faces on inflation. This was among the policies adopted in order to curb inflation in the nation and offer an opportunity for economic growth. However, the success of this method has been in question due to the slower growth rate in the detrimental exports of the nation. The federal government can achieve its policy of promoting employment and stabilizing prices of commodities if they strive to maintain the current prices of commodities. In the short run, the lowly citizen will have to bear with the changes in the economy, and since the conditions do not favor them, the long run effects will be more bearable. However, if the current situation changes for the worst and control of prices falls out of hand, the nation will be in a large debt as one experienced 50 years ago. The chart below indicates some of the factors that contributed to the escalating of the economic situation from 50 years ago. Some of these factors include but are not limited to the following: increased government spending, increased household debt and increased inflation.

One of the greatest challenges facing the federal government is the creation of employment and bringing a state of stability to the economy. This is due to the fact that the available resources are not enough to cover the requirements of the majority. The government can try to adopt the following strategies to salvage the economy. Provide free college training to both the low-income earners and the unemployed. This would ensure that people are trained for specific jobs. As result, there would be more guarantees of getting better jobs once they are out of school. This will bridge the gap between the few rich and the majority poor. This initiative when adopted will not reduce consumer spending, but on the realization of how the money is being utilized, the spending of the consumers will be increased. A customer-centric approach can also be adopted by the government where they encourage people by providing an open forum. In this forum, people can share their ideas and be open to ways that will provide financial independence to the majority. Through this, the prices of essential commodities will reduce and therefore, their demand will rise and as a result, people will spend more money on the commodities.

The case of Microsoft and the government can be cited as a unique situation where the government stepped in to regulate the occurrence of a monopoly using antitrust laws. Microsoft had used its monopoly power to control the operating system and eliminate competitors. This was considered as violating the antitrust laws. Despite the company’s claim that it is trying to innovate its products, the federal government was suing the company for breaking the law. If the government failed to step in, the company would be the sole proprietor of the operating system, and this means that competitors would be locked out. As a result, the company would exploit its consumers. If a monopoly would exist in a nation, there would be price discriminations within different parts of the country. This would ensure that different people are treated according to their level of income. However, certain monopolies may exploit their customers by setting high prices that the buyers cannot meet. On the other hand, the cost of production may be low as materials of production are solely owned. This may reduce the overall cost of the final product. The consumers are differentiated using different methods based on their tastes and preferences as well as their level of income to determine who deserves a discount. The spending habits of consumers, especially online buyers, can act as a better way to provide discounts. Web lining can be used as a way to determine which customers are discounted. Another approach would be providing discounts based on the amount one buys.

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