The lost US decade

Enterprise - - Economy -

The newly grad­u­ated young adults of 2001 in US faced a com­bi­na­tion of shock and dis­ap­point­ment, as, op­posed to their con­fi­dence in the Amer­i­can job mar­ket, there had been steep com­pe­ti­tion for en­try level jobs in face of pay freezes and lay-offs at ear­lier and more dan­ger­ous points.

An­a­lysts term the past decade of re­ces­sion as a lost decade for the US, where the govern­ment and the economists have not been able to find real so­lu­tions to per­sis­tent eco­nomic prob­lems. In the last 10 years, only those were able to live the Amer­i­can dream who de­cided to be­come their own bosses or worked at places like hedge funds which gam­ble on fall­ing mar­kets by short-sell­ing and volatil­ity is ac­tu­ally good for their busi­ness.

The past decade has re­mained im­por­tant be­cause of ris­ing job­less­ness. The IMF found both the re­ces­sions of 2001 and 2008 as the worst among the past ten US re­ces­sions. These find­ings were based on the key mea­sures of loss of out­put, em­ploy­ment, in­vest­ment and growth in per­sonal dis­pos­able in­come.

The of­fi­cial GDP numbers show a peak to trough trend, as thor­ough re­vi­sions re­vealed that the down­turn has been much deeper than pre­vi­ously as­sumed. It in­volved a 5.1 per­cent fall in national out­put, mak­ing the real re­cov­ery ap­pear some­what weaker. Also, the national in­come has not been re­tained to its pre-cri­sis pros­per­ity. An­a­lysts hold the dot-com bub­ble crash, the 9/ 11 World Trade Cen­tre at­tacks, the U. S. hous­ing bub­ble crash and the re­ces­sion of 2007 as the build­ing blocks for the fail­ure of past decade in the eco­nomic his­tory of US.

The fis­cal re­sponse to the cri­sis in the US has been much more dra­matic, with consumer spend­ing ris­ing by 4.4 per­cent in the fi­nal quar­ter of 2010 on one hand. It makes up about two-thirds of the eco­nomic ac­tiv­ity. While on the other hand the un­em­ploy­ment woes have re­mained tragic for mil­lions are still out of work and the un­em­ploy­ment rate has been stuck above 9 per­cent since 2009. Economists say the econ­omy needs to ex­pand by at least 3 per­cent over sev­eral quar­ters to al­le­vi­ate un­em­ploy­ment, it ex­panded by 2.9 per­cent in 2010 as a whole.

Such fig­ures show mod­er­ate signs of re­cov­ery and may lead to a steady growth in the US econ­omy if the Repub­li­cans and Democrats do not re­main at log­ger­heads. How­ever, the con­sen­sus over the debt deal shows pos­i­tive re­cov­ery for the po­lit­i­cal cri­sis as well. With ac­cel­er­a­tion in GDP, exports and house­hold sav­ings, the com­pet­i­tive­ness of US com­pa­nies ap­pears to have grown stronger. As an in­ter­est­ing fact, the poor em­ploy­ment has led US pro­duc­tiv­ity to take off. There are new busi­ness strate­gies and plans st the en­trepreneurs’ end, who had de­cided to be­come their own bosses ear­lier in the past decade. Their cur­rent ac­count deficits have fallen and this por­tion of the pop­u­la­tion is con­tribut­ing to mak­ing a pos­i­tive con­tri­bu­tion to the coun­try’s mas­sive bud­get deficit. Any­way, the present decade is yet to re­veal whether they will also be able to over­come the chal­lenges

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