Develop a Summary on the State of the US Economy Essay

Develop a Summary on the State of the US Economy - Essay Example Additionally, access of low-interest loans and other credits has been easy. This is a chance to property owners to refinances their mortgages. Car sales have also increased significantly due to sufficient liquidity; consumers can take advantage of cheap financial incentives and price discounts by to buy vehicles. However, car manufacturers do not make profit due to the inexistence of price power. The strength of the United States economy is also increasing due to development of GDP brought by defense spending. According to Kubarych, (2002), defense spending especially on military hardware is contributing close to half of the U.S. GDP. The rate of unemployment is still high despite the decrease in the number of job layoffs. Statistics shows that unemployment rate of in the U.S. currently stands at 6% with no hopes of falling. A study by Kubarych, (2002) explains that unemployment rate is likely to increase even further in the future. In addition, most businesses and industries in the U.S. are still making losses despite the economic recovery. Finally, borrowers especially those going for less credit are under tight restriction from lending institutions. The development of the United States economy is likely to slow down in the next 12 months due to factors such as harsh weather conditions, reduction of spending on both the U.S. and countries Europe. Compared to recovery of previous U.S. economy, the recovery of the current economy is slower. However, increase in government spending will likely to foster the U.S. economic growth. A change of fiscal policy is needed to increase economic recovery of the United States. Application of expansionary fiscal policy will improve economic recovery. The fact is that expansionary fiscal policy will lead to increase in aggregate demand. The government does this by increasing spending and reducing taxes. The result is that consumer spending will rise significantly due to availability of extra disposable income (Boyes &