How did the U.S. economy get in such bad shape?

Question

I'm not an economist, but it's obvious the U.S. economy is a serious mess right now. I'm 40 years old, and this is the worst I remember it being. Why is our economy so bad right now? What factors led to all of the current economic problems?

Answer 1

Eventually, I believe the middle class will dissipate and it will be separated into either upper or lower class. The tipping point is at hand, it is just now a matter of time.

With the debt the United States is in and still asking to borrow money, the housing market, inflation and gas prices, we are in a dire economic slump.  A person in corporate America can earn six figures, however, after taxes, insurance costs, car payments, credit card debts and mortgage payments you're making closer to $50,000 (a bit of a rough estimate). The essentials and necessities of living have greatly increased to the point that no monetary savings is truly viable to avoid, and/or be prepared for any kind of emergency.

The military spending, which is approaching $90 billion a year is not helping matters.

Answer 2

Here is a rundown of the causes of the awful economy:

GAS PRICES

- Speculation is partially at cause for this.  People buying oil futures I believe have some role.

- Another factor is growing demand.  With nations growing and having increasing economies there is increased demand for oil.

- Overdependence on oil for our country and others.  If we didn't need oil so much, the high prices wouldn't be so bad.

- low supply of oil.  Its only going to be worse over the years...b/c oil will run out.  Thankfully, peak usage will go down..at least for now (soon).  But the problem will be there- we need to invest within alternate energy.

MORTGAGES/CONSUMER SPENDING

- There was a surge in people buying mortgages and becoming home owners in the last I say...5 years ago (before the crisis began).

-However, many people bought mortgages they couldn't afford.  Some were tricked into getting them (by false promises by lenders).  Others just simply couldn't afford them and lenders gave it to them even though they knew it would be an inefficient risk.

- People ended up suffering because of this.  They lost thier homes b/c they couldn't pay for their mortgages.  Also with consumers (not just homeowners), they were risky with their spending.  They spent too much and got themselves into debt.  By having too much spent on credit, they built up large amounts debt.

BUSH POLICIES

- Bush has been very irresponsible in his economic policy and foreign policy.

- His tax cuts benefit the rich and don't raise revenue.  His high spending has only made that worse.

- He's spent so much on two wars, the Iraqi war being pretty badly planned (and not having adequte soldiers total on the ground- not enough troops).

- This has led to increased debt.  That is a huge problem.  That has made our debts go up very high and as a result, more dollars were printed and its value has gone down a bunch.

- His foreign policy have also had other bad effects, besides hurting our image and relations.  Not only has it made our nation spend a lot of money.  It has caused bad effect on gas prices too.  Thanks to more tension and aggressive actions, (and more anger between Israelis and Palestinians) gas prices have gone up a lot.  There is so much tension that it caused gas prices to be unstable (going pretty high up).

TRADE DEFICIT

- Our trade deficit has grown a lot over the years.

-We're having more products sent into our country than exporting.

- That's a significant problem- it lowers value of dollar which causes higher inflation.

Those are the main causes.  Other causes are the FED lowering interest rates, unemployment,  andfood prices going up.

Answer 3

The short version is Bush.  He came into the Presidency with a huge surplus which he decided to.... refund!  These refunds were hugely nonsensical; the process of the refund was costly...

And then came the Iraq war which according to the Bush/Cheney plan was going to pay for itself in a very short period of time.  Unfortunatley it is costing the US taxpayers $17 billion per year and another couple tossed on there for Afghanistan which really was the Al Qaeda front...

There was also the "criminal' loans made to unqualified people to buy homes they could not afford.  Often they were also loaned more money than the house was worth since it was assumed that home prices would continue to rise indefinetely.

There is also the American education system which does not seem to be able to compete on an average level with those of Asia where many higher paying jobs are now heading.

I think we are in some rude awakening.  I'm nervous about the winter and the cost of heating my home.  I am starting to drive less and I know that I'm just not buying and am planning on buying the way I did before.

Answer 4

We are having economic problems due to the fact that the Republican administration proved to be totally inept in leading our country or representing the citizens of the United States.  We are all paying the price for their total disregard for the will of the people and uneducated decisions.

Answer 5

pick up a history book at the library. PEOPLE are behind it, it's intended to be this way, so we won't be a super power any more. we'll be lucky if we end up with horses.

you're 40 years old, wake up.

Answer 6

It 's true that US economy is in real bad shape right now and obviously, it is going to get very, very bad  and it may get worse. Interest rates are going up regardless. That's what happens when you have inflation. So, interest rates are not the issue. Gold went up along with interest rates during the 70s. Now, whether we have inflation or deflation, I truly don't know. However, it's safe to assume that if we do get deflation, that it's not going to be some minor thing. As far as your money goes, the kind of inflation we're experiencing can be a real killer. It drives up interest rates. It destroy purchasing power. It can destroy your nest egg. It can affect wages, housing, etc.  I think it's also a big help if we can have more knowledge and awareness and be able to track the to track the impact of the fiat money systems that affects their lives. I found the website www.viritix.com or Viritix Inflation Tracker which I think can help us understand more about inflation and how it affects them, aims to track inflation and give individuals an indication of how inflation is affected by what they spend their money on'. Do visit the site and let us know how you get on.