Economic challenges now & before USA

What are some Economic challenges Now?

• Overheating and high demand

  • Rapid demand recovery post-pandemic has risked economic overheating, leading to rising prices and inflation concerns

• Post- pandemic restructring

  • Shifts in work patterns, supply chains, and consumer behavior require significant economic adjustments

• commodity prices

  • Fluctuating prices for essential goods like food and metals impact production costs and inflation

• energu supplies

  • Dependence on stable energy sources is crucial, and disruptions can lead to increased costs and supply issues.

• enviromental issuues

  • Climate change and sustainability concerns push for eco-friendly policies, adding pressure on industries to adapt.

• external fastors

  • War in Ukrain and the middel East

    • Conflicts can disrupt global supply chains and increase energy prices.

  • Relationship with Chinca

    • Economic tensions impact trade, technology access, and global competition.

• Upcoming presidential election

Overheating and high demand

• Cause: Rapid recovery following the pandemic led to surging demand while supply chains were still disrupted.

• Impact:

  • Increased inflation as demand outpaced supply.

  • Central banks, like the Federal Reserve, raised interest rates to cool down overheating economies.

• Response

  • The Federal Reserve raised interest rates to cool inflation and curb excessive demand.

  • Example: Rapid rate hikes starting in 2022, increasing rates from near-zero to over 5% in less than two years.

• Fiscal Policy Restraints:

  • Gradual reduction of pandemic-era stimulus programs to prevent excessive money in circulation.

Post-Pandemic Restructuring

• Shifts in Work Patterns:

  • Growth of remote work and hybrid models.

  • Decline in demand for commercial real estate.

• Supply Chain Adjustments:

  • Increased focus on resilience and diversification.

  • Regionalization to reduce dependency on single markets.

• Consumer Behavior:

  • Greater preference for e-commerce and digital services.

  • Increased demand for sustainable products

Commodity Prices

• Fluctuations:

  • Food and metal price volatility impacts global production costs.

  • Price surges in essentials like wheat (due to war in Ukraine) affect inflation.

• Respons

  • Strategic Reserves:

    • Release of oil from the Strategic Petroleum Reserve during the Ukraine conflict to stabilize energy prices.

    • Support for agricultural sectors through subsidies and grants to ensure stable food production.

  • Trade Agreements:

    • Re-negotiated trade deals to secure access to essential commodities and materials

Energy Supplies

• Challenges:

  • Dependency on fossil fuels amid geopolitical disruptions (e.g., Ukraine conflict).

  • Transition to renewable energy creates short-term supply and cost issues.

• Response Needed:

  • Renewable Energy Investments:

    • Significant funding for clean energy initiatives under the Inflation Reduction Act (IRA), including tax credits for renewable energy projects.

    • Federal grants to encourage the adoption of electric vehicles and build EV charging infrastructure.

  • Energy Security:

    • Expanding domestic oil and natural gas production while transitioning to sustainable energy to reduce reliance on foreign imports.

How is the US trying to solve the external factors - war in ukrain and the middel east and their problems with China

SPØR Alis

What were som economic challenges before?

Challenges of industrilization:

• Tariffs and protectisonism

  • The government-imposed tariffs (taxes on imports) to protect American industries from foreign competition. By making imported goods more expensive, tariffs encouraged people to buy U.S.-made products, which supported the growth of American manufacturing

• Anti-trust legislation

  • o   As large corporations (or "trusts") like Standard Oil and U.S. Steel grew, they often limited competition by controlling entire industries. This led to concerns about unfair practices, so the government passed the Sherman Anti-Trust Act in 1890 to prevent monopolies and promote fair competition.

• The great depression

• The new Deal

• The

What was the great depression

A severe economic downturn that began with the 1929 stock market crash and led to massive unemployment, poverty, and economic hardship in the U.S. and worldwide

Causes of the great depression

o   Stock Market Crash: Speculative investments created a financial bubble, which burst in October 1929.

o   Overproduction: Factories and farms produced more goods than people could afford, leading to surplus and price drops.

o   Bank Failures: Bank runs and bad loans caused widespread bank closures, wiping out savings.

Trade Decline: High tariffs reduced international trade, worsening the crisis

Causes of the great depression

o   Stock Market Crash: Speculative investments created a financial bubble, which burst in October 1929.

o   Overproduction: Factories and farms produced more goods than people could afford, leading to surplus and price drops.

o   Bank Failures: Bank runs and bad loans caused widespread bank closures, wiping out savings.

Trade Decline: High tariffs reduced international trade, worsening the crisis

Effects of the great depression

o   Unemployment: Reached 25%, causing poverty and homelessness.

o   Bank Closures: About 20% of banks failed, shaking public trust.

o   New Deal: Government programs under FDR to revive the economy and regulate markets.

How did they try to solve the great recession problem

President

• Obama inherited a struggling economy and implemented the $787 billion American Recovery and Reinvestment Act, funding infrastructure projects, tax cuts, and education, which helped stabilize the economy.

Monetary Policy:

. -Interest Rate Cuts:

• The Federal Reserve reduced interest rates to near zero, making borrowing cheaper for businesses and consumers.

• Quantitative Easing (QE):

  • The Fed purchased large amounts of government bonds and mortgage-backed securities, injecting liquidity into the financial system.

• Banking System Support:

  • Provided emergency loans to stabilize banks and prevent a total collapse of the financial sector.

Financial sector resue

• Troubled Asset Relief Program (TARP) (2008):

  • Initially authorized under President George W. Bush and continued under Obama, TARP allocated $700 billion to stabilize the financial system.

  • Key measures included:

    • Purchasing toxic assets from struggling banks.

    • Providing capital to major financial institutions like Citigroup and Bank of America.

    • Assisting failing automakers (e.g., GM and Chrysler), saving jobs and preventing further economic fallout

What was the new deal

What

• Was a set of programs and reforms introduced by President Franklin D. Roosevelt to combat the Great Depression, aiming to provide relief, economic recovery, and financial reform I began 1933 and continued through 1938, marking a period of increased government intervention in the U.S. economy

Causes of the new deal

o   Economic Collapse: The Great Depression devastated the economy, causing widespread unemployment and bank failures.

o    Demand for Action: Public pressure grew for federal intervention to stabilize the economy and support struggling citizens.

Effects of the new deal

o   Job Creation and Infrastructure: Programs like the Works Progress Administration (WPA) created jobs and improved infrastructure, reducing unemployment.

o   Financial Reforms: Reforms like the Securities and Exchange Commission (SEC) and Glass-Steagall Act stabilized the financial system and regulated banking.

Social Security: The Social Security Act of 1935 introduced unemployment insurance and pensions, creating a safety net