America's Evolving Economy
America has one of the most developed and mixed economies in the world by nominal GDP as well as purchasing power parity. When one compares on how the economy looked like in the 1950s and today, vast changes are evident. The average per capita real GDP for the US amounted to approximately fifty thousand dollars in the years 2016 with the first state recording a total amount of sixty-five thousand dollars. Economic prosperity and lasting economic growth is a recent achievement for humanity with people preparing even for the future date. However, positive change does not happen, but it requires a careful balance of factors within the market. Globally, the level of economic growth is different with various countries still slagging in poverty. Therefore, an analysis is done on some of the fueling factors that have helped develop the American economy over the years. Additionally, the expected future is predicted using the current statistics to reflect on some of the practices that the country should consider implementing to enhance further growth.
Principles of Growth
First, the infrastructure is a primary aspect of growth with some of the solid facilities including roads, railways, bridges, and communication networks. The availability of these factors is essential where there is need to thrive new businesses and factories through which employment is created. In most of the regions, the infrastructure is efficient, modernized and reliable. One of the main reason why the economy depends on these services is that the supply chain facilities that revolve around mobility of goods and services from production units to the end consumers depend on their availability. Similarly, the American population is growing rapidly due to both immigration and births hence an increase in the customer business needs (Kormendi " Meguire 151). The diversity boosts organizations due to changes in preferences in line with gender, age, class, earnings among other demographic issues.
Human Capital and Economic Growth
Secondly, the human capital is closely related to the country's economy with most of the contribution being influenced by labor productivity. Theoretically, the rate of production in line with human labor is an exogenous factor that relies on the ratio of workforce to physical capital. Due to the availability of well-established learning institutions, America has a stable and reliable labor force that constitutes of educated minds, skilled personnel, and entry-level workers. In most case, most people relocate to America for educational purposes, and before they return to their countries, the state utilizes their knowledge. An example is that there is an increase in the number of healthcare workers due to the present aging population that has risen as a result of prolonged expected lifespan (Wheelan 13). There is a close connection between human capital and the gross domestic product per capita in that educational qualification, and innovative capacity facilitates productivity.
Business Laws and Capital Growth
Thirdly, the business laws and regulations set to determine the flow of capital and business growth. The rules mostly focus on the management of the distribution of demerit goods, reservation of natural resources, control over abuse of monopoly power and exploitation of labor. An example is the control of illegal trading of drugs which helps overcome market failure. Legal restrictions have a positive impact on business in that they send a clear signal of what is wrong (Jorgenson 18). Similarly, the rules help ban dangerous activities that might cause adverse effects. One of the most prominent rules in America is the protection of health workers to help reach into one of the leading industries that drive the economy.
Technological Advancement and Economic Growth
Last but not least, most of the sectors that have recorded continuous growth patterns over the years have a high rate of technological advancement. Examples include the agriculture, transportation, manufacturing and healthcare industries. Technology comes along with increased production, better working tools, increase in supply, output increase and advanced trade. Other factors that have significantly influenced the US economy include capital investments, natural resources, and substantial tax cuts. Growth in the GDP matters in that it expands the overall economy and strengthens the present fiscal conditions (Wheelan 21). Research shows that a 0.1 increase in the overall economy of a country can reduce the level of deficits with over three hundred billion worth of capital in a decade. Reduced debts for the country means that the funding of investment projects is simplified where more benefits are expected.
Future Trends in US Economic Growth
When looking towards 2020, some primary indicators will help give the US a healthy outlook in their marketplace. The GDP growth rate is expected to rise 2.7 percent in 2018, then 2.3 in 2019 and 2.0 by the year 2020. The increase in worker's real wages per hour is expected to rise as technology advances. As a result, the living standards for majority citizens will be improved such that people can afford personal care facilities, basic needs, education among others. The main areas of change include both the professional and technical occupations which are needed in most industrial sectors. Positive changes in the human resources mean that businesses can outsource expertise at any time of need.
Additionally, the oil and gas prices are expected to rise offering a strong dollar competition price. In this case, the cost of transportation, food, and raw materials will be subsidized to meet the income levels of most average earners. Growth in these sectors comes along with higher profit margins where the end consumers are left with more income to spend. Increased expenditure by citizens increases the cash flow rate of a country. Lastly, the interest rates are expected to rise from the current 1.5 percent to approximately 2.2 percent in the year 2020 (Jorgenson 30). A rise in the fed fund rate means that citizens will experience lower charges for loan services. The national treasury is also working towards favorable long-term rates, fixed mortgages, and corporate bonds. Increase in the treasury yields means that the demand for the dollar prices will also rise. The current leadership promises an increase in the rate of economic growth by working towards implementation of these changes while involving the shortest possible time span. Staying focused towards these financial goals means that the country will be able to build on the savings hence increased wealth and improved living standards.
Possible Hindrances to Economic Growth
One of the main barriers to productivity growth is the issue of government hindrances in various segments of the economy. In most cases, adverse regulations slow growth while trying to transfer wealth from a specific group of individuals to the other (Jorgenson 22). The government should, therefore, ensure setting of policies that do not distort the economic incentives that are present. Similarly, a complex tax system for the country can impair investment plans that work towards the future. When taxes are so high, companies outsource their services hence denied chances of job opportunities for citizens and reduce government earnings. Taxes should aim at raising the revenue that is in return used by the government to enhance development. However, use of taxation procedures to redistribute income hinders growth (Frankel 37). Other challenges include the implementation of incorrect incentives, unfavorable immigration terms, and perverse income-based social programs. Failure to address these issues might lead to the lagging of American economic growth which in return affects the global economic coordination.
Conclusion
The American economy is faced with both obstacles and opportunities which affect growth and development trends. However, the factors fueling growth provide more chances than challenges through which business organizations can utilize to ensure a continued rise in the GDP. The government should, therefore, purpose to improve on the strategies that aim at securing these opportunities for the benefits of both the firms and the living standards of the citizens. Continued growth in the economy means that the country has capabilities to effectively compete in an increasingly dynamic international market while finding solutions to the current obstacles. Emphasis should be done on the importance of technological advancement because it has been one of the historic engines of the American economic growth. When quantifying the effectiveness of technological changes, growth can be achieved through an increase in resources used for production and focusing on more output for each unit of resource. Therefore, Americans should become more trained and managed to be able to have a longer-term view on the factors that influence growth.
Work cited
Frankel, Jeffrey A. "International capital mobility and crowding out in the US economy: imperfect integration of financial markets or of goods markets?" (2016): 1-65
Jorgenson, Dale W. "Information technology and the US economy." American Economic Review 91.1 (2015): 1-32.
Kormendi, Roger C., " Philip G. Meguire. "Macroeconomic determinants of growth: cross-country evidence." Journal of Monetary economics 16.2 (2013): 141-163.
Wheelan, Charles. Naked Economics: Undressing the Dismal Science (Fully Revised and Updated). WW Norton " Company, 2013: 12-32
