US Economy - An Outlook for the Coming Year

With consumers directly contributing to more than 70% of the total output of app. USD 14.3 TR (2008) and consumer behavior, owing to job market, still largely recessionary, the US economy could undergo a major structural shift and fall in openness as a result of the financial crisis. As obvious by now, the experience has left the government with a tighter market often feared as an infringement of their personal freedom by Americans.

This structural shift is largely a result of unemployment rates which touched a 26yr high this year and a mounting federal debt which stands at more than 10 trillion USD with the numerous stimulus bills pumped by Obama. However, since unemployment lags by more than 2-3 quarters, it does not behove to present the grim picture for the coming year as it did back in June. Consumer behavior is also bound to improve one the stimulus money kicks into the economy - About 60B USD in spending and 43B USD in tax relief has hit the streets so far, accounting for a mere 13 percent of the plan's net planned amount.

While an increased deficit financing could usher in protectionism in terms of reduced services and manufacturing trade with BRIC, such fears are still uncalled for as BRIC goods and services continue to remain cheaper with their comparitive advantage of cheap labor. So while the US government can force businesses to move back to US, it cannot overnight change the restructuring effect such an export of jobs has had on the US economy in the past 7-10yrs. The US government can instead create more R&D jobs through technologically enhanced infrastructure, effecient science and maths education, and the ongoing work on the healthcare reform bill. Investment rates which currently stand at way more than what the economy has saved, would be more matched in near future, and usher in an investment geared for sustainable and environment conscious growth. It also presents a remarkable opportunity for the economy to restructure with a comprehensive financial regulatory framework, with an increased rate of systemic savings as an after-effect. Such changes would set the country on a 2-2.5% growth trend by the end of coming year, with a atleast .8% rise in growth by the end of first quarter.

So hold on as the the country emerges back strong in a new year and the Obamic superhero rehauls healthcare, infrastructure and education to build back the lost country by the end of his term.