Microeconomics Essay Example | Topics and Well Written Essays - 500 words - 9

Microeconomics - Essay Example by Geoff Colvin discusses the state of affairs of the US economy and how globalization is affecting it. This essay summarizes the findings of the article as well as providing a critical analysis of the potential recession in the United Stats. One of the major factors that has spin a downturn for the US is the weakening of the housing market which caused consumers to diminish their overall spending. The house boom of the last decade was partly created to the ability of the American citizens to obtain very cheap financing which allowed the people to gain equity and have confidence to continue to spend. The money was readily available for financing purposes because a large number of nation internationally were saving a lot of money and plenty of dollars that came from international trade, while the American citizen was spending money madly. The typical American citizen six to eight years ago had a debt to equity ratio of one to one, now this number has shifted to ratio of close to 1 to 0.72 to implying that the persona debt is much higher the equity. When people’s credit is capped out no more money can come in to economy in the form of loans since the citizens do not qualify for additional credit. Another major factor in which the international community is affecting the US economy is in the job market. Many multinational firms are staying away from the United States as a potential investment location due the higher cost of labor in the United States. There are new emerging economies competing for the new jobs of the knowledge economy of our century that provide competitive advantages to the US labor costs. One of these economies is the India who has the second highest population in the world. India is using an economic model based on exporting services for the lucrative IT industry. The Chinese economy has become the dominant manufacturing based economy in the world which hopes that the United States does not fall into a recession since