economic

The US Economy is Not Getting Stronger Even with the Federal Reserve Taking Proper Economic Measures

Introduction

The US economy is the world 's largest . Its GDP was approximated at 13 .8 trillion in the year 2007 . It has a very high level of GDP per capita approximated at 46 ,000 in 2007 . The economy has kept a stable overall GDP growth rate . This has been accompanied by low unemployment high capital investment and research . This has mainly been funded by national and foreign investors

However , the US has faced one

of the worst financial crises in its history . There was a sudden decrease in availability of credit and a proportional increase in the cost of the credit . This has come to be commonly referred to as the credit crunch

The Cause

In March 2007 , economics analysts warned of a credit crunch in the US financial markets . Later in August , there was a general conclusion that the crunch had taken effect in the business sector . However , the consumers were still spared . A survey in September 2007 gave evidence that households had also stated to feel the crunch . One-third of mortgage loans were unable to close due to investors ' inability to purchase these loans (Rabel , 2002

This credit crunch had been in looming . The government introduced measures and loose monetary policies caused a housing boom beginning in the year 2000 . This was not sustainable . This was done through manipulating interest rates . When the rates were lowered to less than the normal...