Recently the credit rating of the US has come down from AAA to AA+ and though the US was able to avoid from defaulting of Payments, the danger days may not yet be over for the US Economy.
Economy’s stability depends on two factors GDP and the Debt. The problem with the US is its increasing rate of Debt and decreasing rate of GDP. Recently according to an estimate the total Debt of the country will overtake its GDP and that is where the problem is expected to arise. How will the US repay the debt? This situation will create circumstances of default of payments.
- Low interest rates on loans for housing market were the prime causes of 2008 recession. To come out of the recession around $1.6 trillion dollars were spent. The crisis also meant that the US government would receive lower taxes from the private companies and thus the GDP and living standards in US further decreased.
- Wars with Afghanistan and Iraq further weakened the economy. For last 10 years US has spent more than $1.2 trillion on the two wars
- No serious measures have been taken for new JOB CREATION. Since the year 2000 no major economic development has been achieved in US. Unfortunately, this is the worst time for employment in the US. More than 9% of Americans are unemployed. Although recent announcements have been made for investment in infrastructure and schools and service industry.
It is possibly not the best time to look towards the US for investments and probably the time is to sit back and pray that the thing don’t go any worse.