Economic Blog – The State of the US Economy

If you look at any economic blog you will see that the US has been the world leader in all aspects of life on this globe for many decades when its economy was booming and overpowering the affairs of the world. Its GDP per capita was the highest in the world, and its economy was the largest among all the major economies. However, the present downturn has laid bare many fissures in its economy, some of which have short-term solutions, but others have more chronic maladies. Some aspects of the current situation are discussed below.

Current Account Deficit
Economic growth has been stunted in the past two decades by the current account deficit that has reached 7 percent of the GDP. In this period as per data on an economic blog, it is only the high level of consumer spending that has financed the economic growth. This has resulted in an increase in imports and a significant decrease in exports. The obvious consequence of this state of affairs was the increase in the current account deficit, which was financed by buying of the US securities by various foreign investors. As per the findings of economic blog the dollar was bound to tumble.

National Debt
If you look at the data on a popular economic blog, the national debt is nearing the USD 10,000 billion mark due to excessive government borrowing in the past few years. The writers on the economic blogs have observed that this amount is nearly 65 percent of GDP. Cost of interest payments have gone up, and the possibility of future tax cuts and increased government spending has receded.

Housing Market Scenario
Financial experts who write on the economic blog opine that the downfall in the prices of houses in the US has aggravated the whole economic scenario. People are wary of investing in the housing market and are seeing their wealth declining. The result is lower economic growth and the economy sliding into recession. The housing sector is witnessing a decline in demand and an oversupply of houses. The storage industry is also affected by this economic downturn, but it presents a viable option to store excess goods rather than hiring or buying new property.

Decreased Savings
As per the economic blog, the consumer-led growth has fueled the current account deficit and increased personal borrowings, leading to decreased savings. This has made the American consumer more vulnerable to any increase in the interest rates. The economy is hanging on an unsustainable footing.

Increase In Commodity Prices
Bloggers at the economic blog opine that despite downturns in the economy, prices have been rising steadily and pushing up inflation. The main reason for inflation is the increase in processing of oil, soybeans, and wheat. This scenario of falling growth and rising prices can be disastrous unless drastic measures are taken.

Available Options
If we go by what the leading economic blogs say, the US economy needs money to pay off the debts, and the most likely step the government can take is to increase the taxes. It will not be a very welcome decision, but such harsh measures are inevitable in order to pay off nearly USD 11.4 trillion USD of debt. The next step will be to live within means implying that the government will have to significantly reduce spending for services that it provides. Simply put, people will receive lesser services for more taxes.

The other bitter pill that the government and the people will have to swallow is that they have to encourage inflation. The total impact of the huge debt will immediately come down, and it will be easy to pay it off. However, according to an economic blog this will not be a good news for those who live on fixed income, but people who have large amounts of debt or have inflation-friendly investments will breathe a sigh of relief.

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