Many are saying that the U. S. economic system is at present on the first stage of experiencing economic recession due to the lack of stability that is happening on key industries on the market (Iht.
com, 2007). With the important condition of the U. H. economy, it’s the role and responsibility from the federal government to provide the necessary solution to address the impeding economic recession in the United States. A balance in providing policies, financial and fiscal coverage, must be properly secured by the federal government in order to have a sustainable remedy for the modern day instability with the U. S i9000. economy.
The instability from the present economic system is being caused by the drop of home’s disposable salary in the market during the first 1 / 4 of 2006. Many economic analysts said that the deterioration of household’s throw away income was caused by the lowering of wages of working category by the end of 2005. The GDP growth rate states was straight down by 0. 6 percent, from 5. 2 percent to 4. 6 percent, after the economic instability starts off affecting the domestic market.
Due to this limited disposable profits of homes or consumers in the market, the domestic ingestion declined dramatically causing significant amount of loses on numerous industries on the market. Like for instance, the housing industry has been suffering to financial troubles as the demand of consumers to get housing market hit their economic stability hard. In this regard, it could be better to target the policies of the government on responding to the limited disposable salary of the households and the low wage level of the doing work class on the market.
Economic Plans for U. S. Economy Recovery
Among the possible economic policies that the federal government could implement is the lowering appealing rates of various financial investments such as mortgage loans for industrial sectors in the market to provide financial support. This decreasing of interest price would give these kinds of industries enough space to strengthen their personal finances and would serve as the stepping rock of their quickly recovery.
The lower demand from the consumers available in the market creates enough pressure pertaining to the revenue and profitability of various companies to perform poorly leading to get financial problems of corporations in the domestic market. With all the lowering in the interest rate, corporations can now borrow much funds that they will need in order to reestablish their accounts and cover the failures that they will get by ongoing their procedure. The only side effect of this coverage would be a conceivable high inflation rate some three years after raising the interest charge in the market as there will be a rise in the money source in the economy.
Concerning the money policy with the government, it could be better if perhaps they would move a legislation that would increase the minimum wage rate of every worker in the United States in order to improve the disposable salary of every home in the United States. With this, the amount of intake of consumers will improve thereby creating an improvement around the sales and profitability of numerous industries available in the market.
One feasible side effect on this strategy will be higher joblessness rate and inflation rate as several industries either layoff a selection of their workers or increase the prices of their goods just to offer room intended for the increase inside the minimum salary rate that the federal government can impose. In order to counteract this possible actions of the private class, the rise in the wage rate from the workers will be accompanied by the provision of government subsidy for those companies which will abide the said plan and will not layoff workers or boost the prices with their products on the market. With this kind of, the government can easily prevent the worsening of the pumpiing rate and unemployment level in the market.
On this factor, the above mentioned alternatives will be the the most suitable solutions in today’s financial instability. The potential side effects of those policies can be minimized throughout the aid from the countermeasures that may be included on the policy itself.
Iht. com (2007). Is the U. S. Economy in Recession? Retrieved Might 1, 2008, from http://www.iht.com/articles/2007/12/16/opinion/edeconomy.php