Economic Analysis of the USA: Problems, Performance, and Solutions

This report provides an analysis of the USA's economic performance, focusing on the period around January 2020. It begins by outlining the strong points of the US economy, such as its high GDP and relatively low inflation rate. However, the report also highlights significant challenges, including unem...Read More

Running head: Economics
0
Economics for Management
USA
1/28/2020

Running Head:
1
Contents
Current Situation and the performance of the USA economy.........................................................2
Major economic problems faced by the USA country and its solution...........................................2
Conclusion.......................................................................................................................................4
References........................................................................................................................................6

Running Head:
2
Current Situation and the performance of the USA economy
The USA economy is very strong in the market as it is a highly developed country. As per the
national Bureau Accounts 2019, it has the world’s largest nominal GDP and per capital, income
is eights highest in the world. In the third quarter of 2019, the real gross domestic product was
enhanced by 2.1%. In the year 2019, the economic growth rate of the USA is 1.5%. The Rate of
inflation in the year 2019 is 1.8% and due to this, the prices of the foods and the other products
have increased in the market. Although the inflation rate of the USA country has declined from
the previous year still the rate and the prices of the products are higher (Bigerna, et al., 2015).
The rate of unemployment is 3.7% in the US which is not indicating the good sign. The rate of
employment is 285 thousand to 157.3 million while the number of unemployment increases from
88 thousand to 6.1 million. The non-farm payroll employment has risen in the country so as per
the Bureau of Labor Statistics the unemployment rate is 3.7%. The Trade balance of the US has a
deficit in 2019 to USD 54 billion (Helling, et al., 2015).
The imports in the USA have declined from 0.1% and exports have risen from 0.6%. Distribution
of income is unequal in the USA depending upon the capabilities and skills of the employees.
Majorly 49% of US income was earned by the household people and whose income was more
than the $1000000 (Quilici, et al., 2015). The major sector of the USA economy production is
the forestry, agriculture, hunting, and fishing. The major sectors which contribute to the highest
to the GDP are agriculture, food and other industries.
Major economic problems faced by the USA country and its solution
The country USA has faced economic problems in the different sectors such as agriculture,
entrepreneurship, healthcare, global competition, in terms of innovation, hospitality and tourism,
labor-intensive things etc. The economic problems in the country USA are classified into micro
and macro-economic problems. The major economic problems in the country are inflation,
employment and unemployment, trade cycle, economic growth, the exchange rate and the
balance of payment, etc. (Harper, et al., 2015).

Running Head:
3
The stock market of the USA country is getting affected through the changes in economic
growth. The performance of the stock market is less volatile so it becomes very difficult to
forecast the future. Due to the presidency of Donald J. Trump, the value stock of the US
increased but in late December again the downward has taken place. The negative movement is
the real economy has been seen through the disconnection between the underlying economy and
the behavior of the financial market (Quilici, et al., 2015).
The uncertainty regarding the future has increased because interest rates are getting higher and
the economic growth is poor among the US trading partners. The real economy of the USA gets
affected through the volatility in the stock market. It is recommended that when the market is
highly volatile instead of selling the shares in the market the investors should hold the shares for
the longer period so that the economic condition can be stable and even the investors can attain
the profit in the longer period (Lin and Liao, 2015). The effects of the stock market volatility can
also be reduced in the economy of the USA through doing the analysis of the employ
fundamental value or by using the tactical strategy of the asset allocation.
The major problem faced by the economy of the USA is a recession which has stopped the
growth of the economy. The GDP of the USA has declined through the recession and it also
includes the slump in the stock market. even there are many negative impacts of the recession
such as it has increased the national debt of the USA and also increase unemployment in the
country (Carpenter, et al., 2017). The wages of the people of the USA get lower through the
recession and even they are losing the opportunities to enhance their income. The companies
situated in the USA are stopped expanding and even their sales and revenues also declining
which was affecting the economy.
There are the several ways through which the impact of the recession can be solved such as by
containing the inflation in the market, by encouraging the saving to the people of USA, by
encouraging of doing the exports, by cutting down the taxes and reducing the government
expenditure (Noori, et al., 2015). There is a solution to reduce the impact of the recession as the
interest rates should be reduced in the market and imports of high prices commodities should be
encouraged.

Running Head:
4
The competitive edge in recent years has declined in the USA as the country mainly exports
manufactured goods, capital goods, motor vehicles and high-value goods. The number of
unemployment has increased from the last few decades due to the expansion of new technologies
(Summers, 2014). As companies are adopting the new technologies, the need for the employees
has reduced and it was affecting the economy badly. The major economic issues in the USA are
rising income inequality in the country, wage stagnation, the infrastructure of the country is
deteriorating and even the budget of the US government deficits. The consumer optimism is
decreasing and volatile prices are increasing in the market due to the inflation the prices of the
commodities are rising in the market. The economic activities are getting fluctuated so it causes a
slump in the trade (Hodges, et al., 2015). The USA country is not maintaining the balance
between inflation and unemployment so they have to fight with the stagflation.
The major issue of stagnation can be solved by reducing the taxes in the economy to stimulate a
better economy. The federal debt of the country USA can also be solved through reducing
federal spending (Gallus, et al., 2015). The stagnation in the country USA can also be reduced by
adopting the modern monetary theory in which spending will be increased to stimulate the
economy. Unemployment can be reduced by boosting economic growth in the country. The
entrepreneurship has to be encouraged by the government and even there are many federal
government projects in which they can recruit the employees.
There are many laws has been made in the country which are dealing rights of the workers. If
there will be any inequality in terms of gender, race, religion or the income reforms then serious
action is taken by the government. The minimum wages are set by the government of the USA to
reduce the income gap in the country (Comanor, et al., 2015). The government of the USA is
also investing in education so that people get more education and can increase their minimum
wage. The government has developed the digital infrastructure to enhance the efficiency of the
economy.
Conclusion
From the above report, it is concluded that the economic growth of the USA is leading the
market but still there are many issues which the country has to face. In this report, the current
situation of the USA economy has stated and it is evaluated that the economic growth rate of the

Running Head:
5
USA is 1.5%. The major sectors which contribute to the highest to the GDP are agriculture, food
and other industries. The major economic problem which was faced in the USA country is the
stock market is less volatile, is rising income inequality in the country, wage stagnation, the
infrastructure of the country is deteriorating and even the budget of the US government deficits.
The competitive edge in recent years has declined as the issue of stagnation was rising. In this
report, the ways to improve these economic issues have also stated and by adopting those ways
the economic growth of the USA can enhance.

Running Head:
6
References
Bigerna, S., Bollino, C.A. and Micheli, S., 2015, May. Overview of socio-economic issues for
smart grids development. In 2015 International Conference on Smart Cities and Green ICT
Systems (SMARTGREENS) (pp. 1-6). IEEE.
Carpenter, C.S., McClellan, C.B. and Rees, D.I., 2017. Economic conditions, illicit drug use, and
substance use disorders in the United States. Journal of Health Economics, 52, pp.63-73.
Comanor, G.W., Jacquemin, K., Jenny, A., Kantzenbach, F., Ordover, E. and Waverman, L.,
2014. Competition policy in Europe and North America: economic issues and institutions.
Routledge.
Gallus, S., Ghislandi, S. and Muttarak, R., 2015. Effects of the economic crisis on smoking
prevalence and number of smokers in the USA. Tobacco control, 24(1), pp.82-88.
Harper, S., Charters, T.J., Strumpf, E.C., Galea, S. and Nandi, A., 2015. Economic downturns
and suicide mortality in the USA, 1980–2010: observational study. International journal of
epidemiology, 44(3), pp.956-966.
Helling, A.P., Conner, D.S., Heiss, S.N. and Berlin, L.S., 2015. Economic analysis of climate
change best management practices in Vermont agriculture. Agriculture, 5(3), pp.879-900.
Hodges, A.W., Hall, C.R., Palma, M.A. and Khachatryan, H., 2015. Economic contributions of
the green industry in the United States in 2013. HortTechnology, 25(6), pp.805-814.
Lin, I.C. and Liao, T.C., 2017. A Survey of Blockchain Security Issues and Challenges. IJ
Network Security, 19(5), pp.653-659.
Noori, M., Kucukvar, M. and Tatari, O., 2015. A macro-level decision analysis of wind power as
a solution for sustainable energy in the USA. International Journal of Sustainable
Energy, 34(10), pp.629-644.
Oliveira, V., 2014. The food assistance landscape: FY 2013 annual report. USDA-ERS Economic
Information Bulletin, (120).

Running Head:
7
Quilici, S., Smith, R. and Signorelli, C., 2015. Role of vaccination in economic growth. Journal
of market access & health policy, 3(1), p.27044.
Summers, L.H., 2014. US economic prospects: Secular stagnation, hysteresis, and the zero lower
bound. Business economics, 49(2), pp.65-73.