The world economy is currently experiencing one of the most challenging situations that it has to face when it comes to financial robustness. Last year, a global economic crisis was felt around in the international market, which has caused the bankruptcy of some of the world’s largest companies as well as difficulties for some of the financial institutions around the world. Many countries have already felt the effects of this global financial crisis and the United States of America is no exemption. Despite the fact that the United States is recognized as among the developed countries in the world and has been one of the states that is regarded to have a robust economy, it is still one of the countries that are currently experiencing the hardships of this financial crisis. This economic problem is not only affecting large corporations but it is also putting the lives of many American citizens in a disadvantageous position. The present economic condition of the United States of America is the topic of major newspapers in the country as well as in other parts of the globe. This is greatly exemplified by the articles found in the Wall Street Journal.
Last 27 March 2009, an article from the Wall Street Journal that was written by Kelly Evans discussed the economic condition of the United States through the country’s profit rates. In the article entitled “U.S. News: Profits Drop at Steepest Rate in 55 Years”, it explains the declining gross domestic product of the country, which serves as the measure of the nation’s economic output. The declined is recorded at a revised 6.3% annualized pace in the fourth quarter as compared with the earlier projection that is only 6.2%. This is recognized as the worst performance of the economic output of the country in a quarter century (Evans A.2).
During the last months of 2008, the United States corporate profits drop by $250 billion that is seen as an overwhelming decrease, which many businesses are still trying to offset. According to the Commerce Department, the profits of corporations during the fourth quarter drop by 16.5%. In the same manner, the financial sector also experience a decline in profit by $178 billion and this amount does not include the losses that the industry has accumulated due to the numerous write-downs as the value of the assets increased. This decline in pretax corporate profits is recognized as the steepest in 55 years. In the previous year, the drop was more than 20% during this same quarter (Evans A.2).
The Chief United States economist that is responsible at forecasting firm MFR Inc. in New York, Joshua Shapiro said that the current economic situation is horrendous. He also expressed, “It destroys the ability of corporations to pay salaries, invest in equipment and do everything else that helps the economy grow” (Evans A.2). The losses could be mainly attributed to the slump in consumer spending that took place at the second half of last year as well as a decline in foreign demand for goods and services that are coming from the United States (Evans A.2).
The disadvantageous effects of this economic condition are greatly felt by the American labor sector. There is a reported increased in employee layoff because companies are cost cutting. This is proven by the data coming from the Labor Department that showed that there was an increase on the number of people that are claiming for unemployment benefits. There were 652,000 claimants of unemployment benefits and this continues to increase almost every week. The last data showed that already 5.5 million Americans are drawing unemployment benefits. This is a clear indication that the market still remains under pressure (Evans A.2).
Evans, Kelly. “U.S. News: Profits Drop at Steepest Rate in 55 Years.” The Wall Street
Journal. 27 March 200: A2.