The US economy though has shown signs of recovery but yet there are external forces which can pull it back into recession. Due to recession, US workforce is less in demand and Asian mercantilists also refused to do trade exchanges with US. With the onset of recession, banking sector suffered losses and nations like China abused America’s free trade policy through export subsidies and import barriers.
By mid 2009, strong exports and production powered modest U.S. recovery. But very little has been done to curb Asian mercantilism. What China is doing is continuing to devalue its currency so as to boost exports. While imports are rising from Asian countries, the American exports are on a standstill and is not rising. US banks are also busy trading and not making loans to small and medium sized businesses. So, the competition from China and credit shortage may slow down US job creation and growth.
Second is the hike in oil prices that has reached $100 a barrel. Higher gas prices will slow down consumer spending on petroleum based products.
The Sovereign debt crisis in Europe is forcing them to cut spending and raise taxes. But it is not doing anything to deal with the flaws in Eurozone architecture. There is absence of EU authority to file tax and spend. During last six months, money supply and lending have contracted in Mediterranean economies and Ireland and also in Europe.
Unemployment in US has remained high and recovery hasn’t yet picked up. There is absence of qualified workers and college graduates are not finding desired jobs. The President is also campaigning and spreading the message that things cannot improve much now and that payroll tax breaks can be just $20 a week.
US will have to review its policies toward Asian countries like China, tap on its domestic fuel production, re-direct banks to lend out to small businesses, make sure that new graduates get jobs of their choice, and protect America from European stand. These will help US to stop slipping back into recession.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to email@example.com