The State of the National Economy

Essay by cowboy_yeehaUniversity, Bachelor'sA+, October 2004

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The United States has the most powerful, diverse, and technologically advanced economy in the world, with a per capita gross domestic product of $37,600. This is the largest among major industrial nations. The war in Iraq has been one of the biggest questions about how the economy is going to react. The background of our current economic situation has an enormous influence on the federal budget, on state and local government budgets, and on private sectors. One of the biggest lessons that we are learning about our economy is that we presently operate in a global system rather than a national system.

Some people say that the American dollar is weakening because of the rising defense spending. The weak dollar is good for America in many ways. This will help improve the trade deficit. Over the last several years, the strong dollar made American goods too expensive for foreigners. In addition, it made foreign goods cheap for Americans.

It is said that the weak dollar is weakening the United States Stock Market but some predict it will strengthen it.

A weak dollar could help boost manufacturing that was hit hard by the economic downturn of the last three years, but this may also come as a high cost for the United States' consumers, corporations, and the government. The falling of the dollar has also taken with it United States stock and bond markets. ( The United States government is currently funding tax cuts and the rebuilding of Iraq and cannot afford to loose foreign investors because they hold more than 40 percent of outstanding treasuries.

As a result of the weakened economy and the expenditure to the terrorist attacks, the previous years' budget surplus has turned into a budget deficit. "We are now in a strong economic recovery in the...