From an overall perspective, the U. S economy has been undergoing a perpetual slum. There has been a dramatic slow down in economic activity; coupled with rising unemployment and falling stock prices as well as constant volatility. These features have been the crux of the US economy in the past year following the credit crunch and it is to be expected without doubt that such a situation will continue forth into 2009. The US economy has essentially undertaken the entire burden of the credit crunch and consequently has felt the impacts to a higher degree than other developed nations.
A major outcome of this feared apparent recession has been that banks have started holding on to cash and liquid securities in order to have a fallback point for their own eminent losses. This has affected businesses badly as most of the US economy works on credit lines. A credit dependency is essentially the markings of a developed nation. However in the case of the US, the credit crunch has essentially affected 5 portions or indicators of the US economy; GDP, industrial production, employment, income and retail sales. “Any doubt that we’re officially in a recession can be put aside,” said Anthony Karydakis (former chief U.
S. economist for JPMorgan Asset Management). He also said “The rapid deterioration of labor markets points to a sharp decline in hours worked and output in the fourth quarter. This is likely to lead to a decline in personal consumption to the tune of 5. 0% or so for that period. Since [consumer spending] makes up about 70% of the economy, the stage has already been set for real GDP to shrink at a more than 4. 0% rate in the fourth quarter. ” Conclusively, the outlook for the entire economy is bleak. However, there is still a ray of hope namely the stock market which holds definite oppurtunities for wealth creation.
Essentially, there are a lot of short term investment oppurtunities available which need to be availed. On the other hand, in about a years time, long term investment oppurtunities will also spring up. President Obama definitely has the ability to bring about change in the country which I must add is much needed change. Intensive capital formation will occur in the next year and the US economy will bring itself back to its former glory. Intensive capital formation will occur in the next year and the US economy will bring itself back to its former glory.