econmic

Running Head : ECONOMIC ISSUES

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Q1 . What is each article about ? Relate it to economic /s and summarize the articles in your own words

The two articles are about America 's economic condition , the pervasive decline and its effects on the American people and all other countries that depend on America , one way or the other . Recession may be defined as a state of economic decline characterized by a reduction in trade employment , Gross Domestic Product (GDP ) and other economic activities

that a nation engages in to sustain itself

Recession is a rough period for most countries . America has experienced two periods of recession in the past . One was in the early 90s , between 1990 and 1991 , the other was in 2001 . These cases were however , not as serious as the current one (The Economist , 2008

Substantial evidence clearly indicates that the American economy is experiencing a sharp decline . The current unemployment rate , low investment and trade levels , housing bust , non-availability of credit and loans , higher costs of fuel , food and basic amenities all point to the fact that the economy is currently experiencing a recession which may take some time to subside

Unemployment rate had increased by 5 .1 as at March 2007 , as a result of loss of jobs within the private sector . Banks and other major financial institutions are not left out . A reduction in bank loans , car sales and purchasing power of the people has also indicated that Americans do not have that much cash to throw around anymore . The construction and manufacturing industries have also suffered drastically . The current situation supports a prediction by the International Monetary fund that 2008 will experience a recession (The Economist , 2008

Since America is a major force in the world , the effects of this recession are felt globally . Financial markets have not experienced a shock like this in the past 80 years . Britain 's housing market is also experiencing a similar situation

This situation is however , redeemable . Unlike other recession periods the rate of job loss is controllable most people have managed to retain their jobs . Congress has risen up to the occasion by contributing financially to the cause . The Federal Reserve has also slashed interest rates to assist financial institutions and the American people Exporters are also taking advantage of the fall in the value of dollar by engaging in massive trade . American citizens are currently enjoying tax rebates and other incentives to ensure that they can still purchase items , as needed (The Economist , 2008

The next President , however , has numerous issues to resolve . With the existing budget deficit , it will be extremely difficult to implement major projects like healthcare , transportation housing and educational reforms . According to the second article Recession Alert , even though America 's labor market was weak before the present financial crisis , monthly job figures are increasingly worse , for example , 4 ,000 jobs have been lost since August , 2007 . The lower interest rates offered by banks...