Economics

The major issues facing the U.S economy are not different from those in other economy. Some of the common one includes inflation, unemployment, supply and demand, business cycles, national income accounting among others. The impact of inflation on financial instrument with short life span to maturity is much more adverse compared to the long term instrument because it is protected from changes in inflation rates and interest rates. Unemployment has also been a critical issue not only in the U.S but also in other countries. Most of the European countries recorded an increase in the unemployment rate brought about by the recent economic recess. The financial crisis also led to the decline in the demand for petroleum product in the U.S as consumer cut down on expenditure on gas. However several countries like China recorded an increase in demand for oil as the economy recovers from the recess. The paper also discusses how the value of economy can be determined using the national income accounting. However, the three approaches mentioned in the paper should be factored to get a true picture of the economy.

Introduction
This paper seeks to evaluate various core issues of the U.S economy. These issues include inflation, unemployment, supply and demand national income accounting and the public sector among others. The paper will also highlight the impact of the recent world wide recess on the U.S economy and other countries. Statistics on unemployment rates in the U.S will be provided and compared with other countries. This paper will rely on information from articles posted in newspapers and other materials from the web.

1 Inflation
According to an article written by Smith (2004, April 19), the TPS investors who are under the FERS systems are expected to take care of their financial security. Although the F fund is a secure form of investment, there are several risks associated with it. The F fund refers to a Fixed Income Index Investment Fund which follows the aggregate performance of the American bond market. The main risks associated with the F fund are interest rates and inflation. Retirees who hold money market accounts, certificates of deposit for income and bond funds have suffered a loss of value in their financial instrument as a result of rising inflation. The F funds are normally long term bonds hence do mature after several years. When a bond is procured for the fund, it normally recompenses the rate of interest for the bonds issued at that particular time. When inflation rises, the new bonds are expected to pay a higher rate of interest. This in effect means that the value of the retirees investments in the F fund will decline. However, in his article, Smith (2004, April 19) posits that the F fund is the safest form of investment compared to stock because it is rarely affected by the swings in interest rates and inflation.

2 The public sector
The latest study done by Fidelity Investments, shows that government workers in U.S saved about 21 less than the workers in the private sector with respect to contribution programs. For instance, the amount saved in these programs such as 401k, 403(b) and TPS was calculated to be about  47,000 for employees in the public sector in contrast to 61,500 for workers in the private sectors. However, the article reported that over 82 of the public sector workers made contribution to their workplace plans as compared to 63 for workers in the private sector. According to the article written by Grobe (2007, September 12) there were several reasons put forward to explain the poor performance by the employees in the public sector. For instance, most of the workers in the public sector still offer conventional benefit plans which are not used by their counterparts in their private sector. In addition, the FERS and CSRS are expected to avail an inflation adjusted lifetime pension plan to public sector workers. The changes in the cost of living are much more frequent in the public sector benefit programs as compared to the private sector.

The article by Grobe (2007, September 12) also point out that workers in the private sector were expected to finance their contribution plans more forcefully than their counterpart in the public sector. Given that the Thrift Board is considering routine staffing for the workers who have been hired recently, the article expect an increase in savings and participation among public sector employees.

3 Unemployment
Unemployment is a major issue of concern around the world.  The Daily Star featured an article by Keller (2009, November 7) which highlighted unemployment issues in several countries around the world. The European Union predicted an increase in the unemployment in the Euro zone to 10.6 per cent from 9.4 per cent in 2009. According to Keller (2009, November 7) the rate of unemployment in about 29 rich countries that are members of Organization for Economic Cooperation and Development varied from 3.4  in Holland to about 18.2 percent in Spain according to data released in September. The economies of the developing countries have also been adversely affected by the rise in unemployment. Although Brazil is witnessing a stable unemployment rate, Mexico registered the highest level of unemployment that hit 6.3 per cent in September.

The article in the Daily Star reported that economists in the U.S projected the unemployment rate would reach 9.8 per cent in October, which would be the highest rate in 26 years. Keller (2009, November 7) reported that unemployment in Germany dropped for the second month in October although the consequences of the financial crisis were still evident. The revised unemployment rate in Germany was 7.6 per cent in October down from 7.9 September and which was below 8.2 per cent recorded in August. The rise in unemployment in France has made the government except tax obligation to some employees. The unemployment rate increased to 9.7 in September from 7.6 per cent in 2008. The unemployment rate in Japan declined in September. The rate of joblessness was 5.2 down from 5.6 in August. Statistics point to the fact that unemployment rate in Japan is on a gradual decline as worldwide demand for cars manufactured in the country increases.

4 The business Cycle
Most students of economics are taught several concepts about the history of the business cycle. The article written by Rothbard (2004, July 16) in Misses Daily indicated that the concept of business cycle did not exist prior to the 1913 era and no one could comprehend the cycles of affluence and depression in the economy. Rather, most scholars could explain business cycles in terms of remote crises and panic. However, the article point out that the business cycle concept was introduced by Wesley Mitchell in his work called Business Cycles in 1913. Wesley explained that the prosperity and the depression in economic activities were known as business cycles and these changes could be attributed to unexplained processes within the capitalist model. However, according to Rothbard (2004, July 16), the business cycle theory was discovered by the British classical economists that included Ricardo and the Currency School. They were the first to discover that the cycle of prosperity and depression was as a result of interference of the forces of free market economy through inflationary impacts of the bank credit initiated by government. The article notes that the complete theory of business cycle was developed by Ludwig Von Mises.

5 Supply and Demand
According to an article by Barker (2009, May 24) that appeared in San Francisco Chronicle, a recess usually contribute to a decline in the price of crude oil, a commodity widely viewed as the engine of global economy. The global oil market is saturated with petroleum due to the persistent recession in some countries. The impact of recess in these countries is that the demand for petroleum is very low whereas supplies are in abundance. The current recess has increased the volume of oil stock world wide with the supply of the product at its highest in U.S. During the recess in the U.S, the prices of crude oil fell as a result of decline in demand. The U.S consumed 2.6 less petrol in the last one month compared to what the used in the same period last year. More over, the demand for oil in China is set to increase after the recess. The countrys consumption increased by 3.9 in April compared with the same period last year.

6 National income accounting
The national income accounting is the ideal way of measuring economic activities in any period of time. According to Krishnan (2009, June 10) there are three methods of measuring economic activity the product method, expenditure approach and income method. The amount spends on goods and services must be the same as the value of commodities produced in the economy. The amounts spend by consumers to acquire goods and services are equal to the income accruing to the seller. Each of the three methods used in national income accounting provide different features of the economy thus it is paramount that when computing national income of a country, all the three approaches are employed to give a complete picture of the characteristics of the economy. For instance, the gross domestic product (GDP) is one of the most important parameter used in computing national income hence special focus should be given on the approach employed in calculating the metric.

Conclusion
National income accounting, inflation, supply and demand, business cycles, unemployment and the public sector are some of the core issues facing the U.S economy. However, it is worth to note that these issues are global in nature and all economies in the world are subjected to them. The current recess world wide could be attributed to globalization because all economies in the world are interconnected in a complex web such that a slump fluctuation in business cycles in one country is soon felt in all other economies. However, some countries such as China have shown signs of recovering from the financial crisis. The economic outlook in the future looks encouraging.