The past three years has seen an economic downturn in the United States of such proportions that we’ve not witnessed since the Great Depression of the 1930s. With a staggering unemployment rate of around 9%, there are unprecedented amounts of debt –with consumer confidence at near lows at the end of 2011. The projected economic forecast for 2012 does not seem all that much brighter.
While there are certain positive signs the economy has not totally tanked, there are today several forces at work which are predicted to keep our economy from completely turning about by the end of 2012. While economic forecasts cannot be fully exact provided that heretofore unknown factors can have a wonderful impact. Unknown factors such as the 9/11 attack in 2001 which transferred the US economy plunging down further than it was after the Tech Bust of 2000. There are some factors which are well known and can have a strong impact found on the US economy.
European Debt: The crisis which is currently gripping Greece appears to be spreading to other European countries, particularly Ireland and today Italy which is the 8th largest economy within the globe. A debt crisis is currently gripping many European countries. Countries which are based on their aging populations exiting the work force with too few folks left to pay the taxes essential to support the government. While Greece has a relatively little economy, Italys is so large that if they go into bankruptcy it would take down most of Europe.
In turn, if Europe falls into crisis, then the US may be greatly impacted also. With all the massive investments and reliance on Western Europe in particular, a remarkable economic downturn could have a severe hit upon our economy. The question today is not if it will happen, but when. Economic giants such as Germany can assist delay the crisis, but not prevent it. If it will happen in 2012 remains to be seen.
Election: In Presidential elections, traditionally our elected officials do really little to rock the boat, thus to speak. The present debt crisis has paralyzed both the Congressional and Executive branches into non-action. While there are ideological and philosophical arguments on both sides, the conventional political maneuverings during a Presidential election year will accomplish little if anything. This lack of action might make little sense during this time of great economic stress, but from a political standpoint it makes perfect sense. Should you dont do anything, then how can you be blamed for it in case it goes wrong or doesnt function because quick as you promise?
US Consumer Confidence: Many large industries in the US have plenty of money for investment and interest rates are at historic lows. But one big reason many businesses are not expanding is the extremely low confidence the American public has in the economy. There are certainly countless additional reasons why large businesses aren’t investing, but until consumer confidence picks up, the economy usually stay in the doldrums.
Based on the impending crisis in Europe, the Presidential election, and low consumer confidence, there is little reason to believe that the US economy might Improve over the next year.
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