US not on the Road to Recovery Paul Krugman, the Nobel Prize winning economist in his article “US not on the road to recovery” conjures his view thatthere are so many hindrances for the United States to re-emerge to the economic state of affairs it used to be in, prior to the recession of 2008. The purpose of the article intends to urge the US government on the need to get real serious about the crisis that the economy faces and to create more job proposals. In this article, he contemplates whether the real issues that affect the economy have been addressed properly yet, even though the recession officially ended two years ago.
He questions the adequacy of jobs being created in the country and worries about the growth of economy in real terms. He also raises the question how the US government is going to deal with the high deficit level and burgeoning debt of the economy. The issue embedded in these questions is whether the economy is on a low growth phase or is it moving to a double dip recession. Considering the ratio of employment to population, in 2007, around 63% of the adults were employed compared to a mere 58.2% in June 2011, two years after the recession.
(Krugman, 2011) This indicates that there is a possibility of long term or even permanent unemployment for the American workers. The fact that US debt is above 80 percent of the GDP poses a greater threat to the economy. The author says his reasons for US not to be on the road to recovery are based on these facts and data.
Also, considering the Euro zone crisis and the exposure of US companies to Europe, the chances of recovery seems far from uncomplicated. The author reaches to the conclusion that creating more jobs and adopting substantial political measures to support the economic condition as the only go. But as per the IMF survey, bringing down the debt and implementing more stringent financial measures can bring the economy back on track but with huge costs involved. One of the main concepts used in this article is the importance of creating fresh job opportunities and how it directly affects the growth of the economy.
The idea is that, less unemployment will lead to better purchasing power for the people and this will fuel the economy with the money being spent on goods and services. Also businesses will start making profit once people start buying their products. The author uses a pessimistic approach in the article regarding the immediate future of US economy. He assumes that the Obama government’s measure to correct the downtrodden economy has been very symbolic.
This assumption need not be accurate given the fact that the policies may take some time to show the effectiveness. Another aspect is that creating jobs and bringing down the debt are better said than done. The author does not suggest any solutions to address these issues in the article. The implications of the current worsening economic situation is that, there will be more job loss in the economy which will lead to a situation where one in every three Americans will be living in poverty based on the present standard of living.
This will mean a lesser disposable income leading to a slower growth of economy owing to lesser spending. All these may lead to another recession which can possibly be more catastrophic than the previous one. The point of view of the author identifies a few effective solutions which can be applied to prevent the economy from falling further even though the practical side poses many challenges. However creating more jobs and bringing down the debt are not the only solutions to the problem. Especially when the Euro zone crisis exhibits a bigger threat, the author has not focused on the issues it might bring on its way. References Krugman, P.
“US not on the road to recovery: Paul Krugman. ” The Economic Times. 8 August, 2011. “To Analyze Thinking We Must Identify and Question its Elemental Structures. ” Foundation for Critical Thinking. 27 November, 2011.