U.S economy is among the largest in the world by nominal GDP since the 1890s. It is a highly developed mixed kind of economy. Although it is among the best economies in the world, U.S economy is getting worse due to several reasons that if not controlled, in the next few years it could be in very poor shape. However, with some of the policies being put in place by the new Trump government if well implemented I believe that that the economy will stabilize.
The U.S housing peaked in the year 2006 after which it started dropping and reached its lowest in 2012. This drop according to consensus was a major cause of the 2007-2009 recession that was experienced in the U.S. The housing stock, however, has since 2013 recovered experiencing a major rise. In my opinion, the U.S housing market is likely to accelerate as there is still room for the market correction after the recession (Freedman, 2010).
The U.S has a large deficit as its expenditure of $4.407 trillion is more than its revenue which is $3.422 trillion. Economists have related this deficit to four main factors. First is the increase in the military budget by almost double due to war terror caused by the attacks on 9/11. The second cause was the tax cut of income tax and extended unemployment benefits. Mandatory spending in the U.S which involves social security payouts has also increased increasing the deficit. This includes Medicare and other programs that are mandated. The financial crisis experienced in 2008 in the U.S also reduced the federal taxes and overall revenue.
There are several measures that the government can take to reduce the deficit. They should reduce the payment rates of Medicare in high spending areas. They can also bundle the payments made by Medicare. To reduce the military budget, the state can replace some military personnel with employees who are civilian as they cost less. The government could also maintain low-interest rates on borrowed money as an incentive to the citizens to borrow more money. The borrowers would in return spend this money on goods and services increasing tax revenues. (Freedman, 2010).