SWOT Analysis of United States economy Essay
The American strong points include the following aspects:
It is still the leading market-based economy globally, with low taxes and less regulations that are less burdensome than in many Europeans countries as well as Japan and China. The United States economy also boost of a highly-developed financial system and institutions for training and higher learning educations. These two aspects have helped the United States to continue being the wealthiest country in the world.
Other strengths include: America is a country with high democratic space and thus attractive for investments
The government has made commitment to resolve the economic mess it is currently experiencing American has well trained and educated man power that has the potential of reviving the economy American has no restriction o foreign investments The market is prospective for new products as well as services America offers a level playing field for both foreign and local industries.
There are ready professional to assist investors with business and investment issues like taxes and business law It’s very easy to register a business in the U. S market Has got the best financial system with a well developed banking system Good communications infrastructures with the internet and mobile phone network highly developed. America is highly multiethnic country
Weakness of American economy
The weakness that have been observed in the American economy are these: Its greater-dependency on inexpensive credit, ten years ago, America experienced its highest stock market bubble ever since the 1920s, whereby the values of technology stocks were put at absurdly high prices.
This babble, however, was driven by quick money supply and it come together with a sharp rise in the private segment debt and present deficit that have reached highest levels. Thus because of the debts in the private sector and the imbalance that has been a result of Federal Bank financial policies, have created a recession in the economy. Thus, it is likely that the sharp recession that America is currently going through will provoke highly destructive consequences among the regulations, increased taxation and high inflation.
Increased unemployment currently and is bound to increase High dependence on foreign debt Weak macroeconomic with raising inflation and low exchange rate Reduced earning thus low consumer purchasing power and less spending Population is highly aging The stock market has weaken Major financial institutions collapse weakening the industry and causing anxiety (Economist Intelligence Unit, 2008).
Among the opportunities offered by the US economy are:
A strong and stable political environment
The government is bound to give a lot of attention and interest to business/economy recovery American will strengthen its position as the leading economy in the world Its links with Europe and emerging economies will continue to be strengthened Foreign policies are bound to improve and create good relations with other countries Wars especially the Iraq war that is draining the economy is bound to end and reduce the government spending Has high spending population and with possibility of raising spending with any improvement in the economy
America still offers the best business environment with low taxes less restrictions. Has highly developed technology industry with good prospects of research and development Has well developed infrastructure, telecommunication and transport system There is also an opportunity of discovering new oil fields and other energy sources that will reduce prices on gas and improve the overall economic performance (Economist Intelligence Unit, 2008)
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There is always remote possibility of terrorist attack
Conflicts in other countries that America has interest in may escalate for example in Iraq or Georgia The government might introduce regulations in the markets to deal with financial crises The current depression in American will affect other major economies in the world. Macroeconomic indicators for example inflation have become unstable Have deficiency in energy supply and may increase Population ageing will continue Reforms in economy may not bring about the desired changes (Economist Intelligence Unit, 2008)