The Economy and Its Problems

A new Pew Research Center reports the median income for the American households in 2009 was 52,195.00 dollars. Last year the median income fell by 4.1% to 50, 055.00 dollars. The employment figures during this year and in the future look bleak. The projected figure at this time of 1.6 million is an average of 135,000 new jobs a month with a 8.1% unemployment. The question is will we meet this figure. The future of the economy does not look promising. The GDP is likely to stay around 2%. The unemployment rate is likely to stay around 8% through 2013. The Federal Reserve recently announced their “open-ended policy of purchasing $40 billion per month of agency mortgage-backed securities. This action caused a positive response in the stock market initially. The Federal Reserve is planning on keeping their funds rate at zero to 1/4% through 2015. They feel this will help to stabilize unemployment and support price stability. Others question the logic behind this move. They feel that this action will cause an increase in inflation and will have little effect on the employment picture.The big question is will Congress and the President able to an agreement on the problem of the fiscal cliff that is fast approaching. The uncertainty of the state of the fiscal cliff causes the taxpayer and businesses questions as they do not know what lies ahead. If the government does not deal with this then large tax increases and large automatic federal spending cuts will take place. These problems will start as of January 1st 2013. With this hanging over the country businesses will be unwilling to hire and taxpayers will have less money to spend. This then can cause the country to fall into another recession. The local, state, and federal governments are all struggling to meet their obligations. All are experiencing reductions in their tax receipts thus causing reductions of their workforce. Because of these circumstances the Federal Reserve has acted by purchasing $40 billion dollars per month of agency mortgage-backed securities. With the election only weeks ahead of us the two presidential candidates are going to have to give specific ideas about how they are going to solve the country’s problems. In October the candidates are going to have three presidential debates and one vice presidential debate. These debates will offer the voters the opportunity to see the candidates side by side. The voters have the benefit of seeing which candidates and programs they want for the country’s future. So again the election in November will have a large influence on the country’s future for generations to come.

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