Factors that Affect the American Economy

The world is a fast changing place and every 30 years or so the landscape gets a make over so that hardly resembles its predecessor. The U.S. has been realizing sluggish grown over the past decade and it doesn't appear to be getting better anytime soon.

The key difference between the economic indicators in the past and the present are that the U.S. is now engaged in a global economy. Thus the indicators of the past don't necessarily represent the current economy. The U.S. is much more likely to be subject to major world events and economies than it was in the past.

Even though the U.S. is still the most powerful economy in the world it is showing signs of decay. For example the projected growth of the U.S. will lag behind the world economy (Hansen, 2007). These signs of decay are primarily from world events and trends. However, the problems are exacerbated by America's failure to adapt and compete.

Major Influences on the U.S. Economy:

1.) Consumer Culture, Debt and Interest: Americans are people who are highly indebted to support their consumer culture. Our foreign debt and personal debt make it more expensive for Americans to borrow (Hansen, 2007). As this debt raises so do our interest rates which affect our overall ability to do business and the amount of defaulted loans (Bankruptcy Filings Show, 2007).

The financing of the Gulf War, The War on Terrorism, and growth in Asian countries are affecting our ability to keep borrowing money. Even though we have these problems on a national level we are also suffering on a domestic level because consumers must import lots of foreign items to fuel their need for cheap products.

2.) Natural Resources and Energy: The world only has so many natural resources within it. As the price of oil and other natural resources rise, the cost to the economy also rises (Café fight is, 2007). These natural resources are used to make rubber, oil and other products and when they are not plentiful or there is competition for them their price rises (i.e. China and Oil).