US economy has been going through a recession. Due to collapse of financial market and burst of housing bubble, economy of US has been adversely affected. US’ influence over world economic matters has naturally led to a global economic crisis, since its own economy is going through a lean patch. Effort are always on to get US out of recession and back to economic growth.
Weak fourth quarter
On November 6, 2008 Federal Reserve Governor Kevin Warsh said that US economic growth was likely to be weak in fourth quarter. He suggested that US economic growth depended on reconstruction of financial system and not on an improvement of housing market.
July-September 2008
US economy experienced a contraction between July-September 2008. During this period US economic growth contracted an annual rate of about 0.3 percent to 1 percent. In August 2008, unemployment rates reached a record high of 6.1 percent. Around 84,000 people lost their jobs during same month.
Central bank and US Treasury
In early November 2008, US central bank cut interest rates by 0.5 percent. This was done in order to support an economy under recession. Financial market crisis has made it necessary for central bank to ensure that credit is available to a larger section of its economy, which is not part of US’ financial sector. US Treasury and Federal Reserve also have an important role in repairing US’ financial market. Emergency liquidity funds injected by them have been somewhat useful in improving condition of US economy. For US to achieve economic recovery and growth, financial institutions have to follow new models of credit.
US economic growth: Challenges
Apart from job losses and rising unemployment, US economy has several other challenges to cope with. Flat wage rates, people without pension and health insurance, high family debt, are major problem areas causing a hindrance to US economic growth. Housing and mortgage crises have a firm grip over US economy’s growth potential for near future. Americans have started paying more for basics such as food, fuel, medical care, and college tuition.
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