With unemployment rate 6.1% at everyone knows that, for decades, the US has fought the unemployment crisis viciously. The Obama administration bore the brunt of the blame in its last years in power. There were even some startling layoffs in the tech industry and, most surprisingly, in the military. Nevertheless, seemingly, the nation is fast recovering from the effects of this problem. The job market, in 2020, is slowly rising from the ashes. Arguably, more and more people are changing status from being unemployed to employed. However, no one should doubt that unemployment is still a major issue in America today.
What has caused all these troubles for the world's surviving superpower? Do not be deceived. None of this happened overnight. It has taken root gradually, stealthily and steadily. The economy slid to instability slowly, heading to unwanted areas. The prices of items have risen to an all-time high.
Without a doubt, the effects of inflation has confidently reared its ugly head, again. What is more, the US dollar has significantly lost value in the world financial markets. Even the cost of certain essential aspects of the economy has skyrocketed phenomenally. This includes the cost of accessing health care, education and property prices.
Have you heard about the academic Theory of Economic Cycle? This is the theory that helped predict financial market peaks and collapses in the past centuries. Of course, like with everything else, many believe in this theory. Many others don't. Regardless, basing on this, what are some academic predictions touching on the US in 2020 and beyond?
Well, the forecast is startling. It says that the US is hurtling towards one of the worst financial crises in history. Will this prove to be true? It is well known that the US, although considered one of the richest nations on earth, has a huge gap between the rich and the poor. If this report came true, how would it impact on the citizen's life? Indeed, what circumstances would precipitate such a crisis?
There is no sign that the ordinary man's income status or wages will go up anytime soon. Things are certainly not promising. The wages of most workers have remained stagnant rather than improve. It is interesting to note that the US economy and market has always been characterized by a consumer-based modus operandi. For this reason, the average consumer is always being encouraged to spend more.
What has been the overall effect of such an economic impetus? Well, the consumer, faithful to the hook, has always done exactly as prompted by the gurus of the national economic dynamics. Without disappointing, the consumers have always gone out of their way to spend everything; to the last coin. After all, have they not been encouraged to do so by those who know better? The experts have spoken. Who is the consumer not to follow suit and make the gurus proud? So, ‘spend more and more' has been the silent maxim followed by the ordinary consumer in the US. And this has gone on for decades.
The result? The average consumer has been increasingly forced to borrow more and more. The ordinary consumer is ever digging deeper into the pockets, even making use of credit facilities to fill the gaps that, predictably, come. What is the effect of such a situation?
Simple. The rich are getting richer. The poor are getting poorer. As the consumer spends more, rich investors, who manufacture the products loved by the consumer, will have more money thrust into his pocket. The rich will make more money. This monies are further invested in the manufacturing and other sectors. Soon, more goods will flood the market. The consumer gets excited. He borrows more money to get these dear goods. And the cycle continues.
Of course, this is typically how the gap between the rich and poor widens by the day. Yes, the rich get richer while the poor get poorer. This is a sad fact of life in modern America: 90% of the population has become a hapless victim of such a sorry state of affairs. The US economy is, therefore, currently overburdened with ballooning debt. As a result of inflation, more and more workers are being laid off from their jobs. There is an increased need to borrow more and more to fill this gap.
What is the ultimate result? Predictably, inflation will keep soaring. Interest rates will follow suit, also going up. There will, eventually, be less economic activity to hoist anyone out this sorry situation. We cannot deny the fact that this is the current situation in the country. Any denial of this won't solve the issue. Yes, again, economic decline and stagnation is certainly here with us.