The American economy's response to major challenges

¶ … American Economy Has Overcome Many Challenges

The United States is a big and successful country that is dreamt by many though the nation is filled with challenges raised by both its friends and foes. Since the 9/11 attack to U.S., the American economy has undergone a lot of challenges that no other country has perhaps ever experienced before. These include stock market decline, terrorisms, war uncertainties, and recession among many others (Longley, 2006). However, despite of these, the American economy remained strong and un-shattered.

economic upswing started after the 9/11 attack where stock market declined, worsened by escalating energy price and interest rates (OECD, 2005). However, this was balanced by productivity growth of major companies and businesses in the U.S. which helped in raising back the U.S. economy. Although business investments have contributed in resolving some economic drawbacks in the country, further problems were still faced by the American economy. This includes the increasing external deficits, rising labour costs caused by lack of resources, and increasing interest rates in government finances. Nevertheless, as usual, the Americans have overcome these challenges with the help of increase in the nation's revenues.

The American economy had been resilient to the shocks that the nation had experienced, particularly the terrorist attacks and rising oil prices, because of several factors that the nation have implemented. This includes growth in immigration, globalization strategies, and strategies in the banking systems (the Economist Online). Moreover, as indicated by the Economist Online, spurt in productivity has also boosted growth. But the main reason why America's growth has remained strong in recent years has been a massive monetary stimulus. The Fed held real interest rates negative for several years, and even today real rates remain low. Thanks to globalisation, new technology and that vaunted flexibility, which have all helped to reduce the prices of many goods, cheap money has not spilled into traditional inflation, but into rising asset prices instead -- first equities and now housing.

Terrorist threats have been a major problem and challenge to the American economy. This is because the stability of the political condition as well as the political relationship of the U.S. To other nations is where the American economy bases a large part of its economic state. Therefore, terrorist threats greatly affect the flow of investments in the U.S., driving away possible investors in fear of not getting the right earnings due to unstable peace and freedom in the country. The nation continuously overcomes this challenge through strategic intelligence responses applied and conducted by concerned organizations.