The current state of economy of the United States is in positive progression yet at a crawling pace. This can be attributed to several factors that affect the macroeconomics of the country. This has made the economy to be said to be in recession. Some aspects that indicate that the US economy is in recession are the deterioration in job market and continued loss in income generation over the past six months.
The main cause of recession has pricked the conscience of many macroeconomists. This has resulted in investigation into the economics pillar of the country revealing that all pillars are facing a similar situation of recession. One of the pillars, employment rate recorded a decline making unemployment rate to increase to levels of about 7%. The other, GDP, recorded even a negative value of 0.2% which can be interpreted as general constraint in the US economy.
Analyzing this report according to Stieglitz and applying the knowledge in his book and website, the economic phenomenon can be explained. The first thing that the author elaborates on about the US economy is the economic policies employed in resolving some economic problems.
Looking at the monetary policy, the government applies this policy without considering the long term effects on the economy of the country. By controlling the amount of money in circulation, the government can control factors like inflation and hoarding. This policy helps resolve short term problems but in the long run, the aftermath may be disadvantageous to the economy of the country. This is the policy applied by the US government so as to control the lending rates of banks resulting in control of international trade and having the economic reserve (Stieglitz, 62).
Fiscal policy mainly deals with the government expenditure. This is mainly because the government expenditure is met by the economy and if the economy cannot meet all the demands of the budget, then a deficit occurs in the economy resulting in negative economic growth. Enacting policies that will help control expenditure and increase revenue generation may be helpful to the economy in saving the current situation (Stieglitz, 65).
The other aspect that the author dwells on is the pace and process of globalization. To begin with, globalization in the American economy was done abruptly. This did not allow the economy to adjust to the changes in revenue generation and investment structure. Lack of adaptation of the economy to the changes in the economy caused it to have positive short run benefits but negative long term effects.
According to the author, it is not only the pace of globalization in economics sector which was wrong but also the policies used in the process. This made the whole process to be the root cause of the economic constraints. The policies allowed liberalization which caused slow death of many local industries due to cheap imports as well as reduced revenue generation by international trade (Stieglitz, 87).
The main recommendations that this book offers to the current economic problem in the US is implementation of pre-globalization policies at the correct pace. This will allow the economy to adjust to the changes and with time catch up and record positive growth. The author also illuminates on how to use the monetary policies and fiscal policies wisely to ensure that the long term accruals are not a problem to the society.
In conclusion, the current American economy is in recession though with very high chances of improvement. If the economics council of the country evaluates the available options slowly and keenly, then appropriate policies will be enacted and implemented accordingly resulting improved economic status.
Work cited
Stieglitz E. J. Globalization and its Discontents. 2003. New York: Norton Paperback Publishers.
