Is the U.S. Economy Sick?

• 06.23.2015, 10:36
•  America,  World

The latest forecast for the U.S. economy demonstrates that something is going wrong. Federal Reserve expected average economic growth for this year to be around 1.9 percent, which is less than the one in the previous forecast. The recorded growth was 2.5 percent and 3.1 percent a year ago, Economic Times reports.

Although the country has overcome the global crisis, the economic growth remains passive. What are the issues that make the U.S. economy down?

Some statistical data can provide ideas to answer the question. The number of job places in the country gives partial answer. According to the statistical data in the past years the average growth of the number of job places amounted to 255,000. In the time period of six months, it has decreased to 236,000, while  since March the average has fallen to 207,000.

According to the U.S. policymakers, the solution of the slow economic growth can be found in public and private investment. In order to push investment the Fed needs to review its policy over interest rate. The investment will significantly support strong growth and rise productivity. Public spending will work on the benefit of the job creation. Investments in the area such as work on roads, bridges, mass transit and railways, work on basic science and clean energy will create new job places, which will help to cut unemployment rate for the short period of time and will ensure long term economic growth and productivity.

The other issue that needs to be reviewed by the Senate are the profits of multinational corporations that should be brought to the U.S. instead of holding it abroad. In this case this money can be added to the budget thus covering deficit over the time.

Fiscal policy is not efficient any more when the economy needs to add new jobs. Government should rise the spending as a part of the economy (through the investments as it is mentioned above) in order to help to create new job places.

The U.S. economy needs hard work from both side - government and Fed,  to be healed. Government should make investments in the areas where job places can be created very fast, while Fed should raise the interest rate in order to motivate public and private investment to grow.