Most of the Americans will depend on the financial institutions like banks for loans for every requirement. Banks has allotted loans to every needy customer without having a proper analysis of the financial capabilities of the customer which finally resulted in failures in returning the loans by the customers and the banks began to collapse. The recent economic crisis has caused one of the worst economic recessions in the U. economy which resulted in many people losing their employment. Unemployment rate often reflects the amount of poverty a country have and hence the recent economic activities are not so well for the American people.
The crisis, still not fully under control and hence thousands of people are losing their jobs in every week. The current trend in which many people losing their jobs may continue for some time more as per economists and the President of America. The damage caused to the economy due to the current crisis may not be repairable over a night period and hence people need to wait patiently for some more time to stabilize the economy and to regain their lost jobs.
In President Obama’ s opinion, the recession may continue for some more time and the actions taken will yield the required results within 6 months from now. Another reason for American poverty is inflation. Inflation is a universal economic phenomenon in which the prices of all commodities go on increasing except money and hence even the salaried professionals find it extremely difficult to survive in American society with the income they have. High inflation rate always adversely affect the economic development whereas the low inflation rate may result in output loss, unemployment and distorted investment and consumption decisions.
Inflation rate must be kept at an optimum level in order to keep the economic development going on a higher note. Globalization and liberalization policies prompted big organizations to expand their business to overseas countries since the American market is almost saturated for them.
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