America SWOT Analysis
United States of America (US, USA or America) is a federal republic that comprises fifty states and one federal district. Situated in central N. America, the country is renowned for its economic and technological development in almost every sector. The largest market in the world with the largest GDP, and the economy of the States is mostly driven by its consumers regarding the services sector.
Strengths:
• Largest and the most important market in the world.
• High value investment on R&D and Education.
• It has the world’s largest economy, having GDP approximately $14.26 trillion (2009), almost 3 times the size of Japan’s economy (2nd largest economy).
• The economy is driven majorly by its consumers, described mostly as a ‘consumer economy’.
• Around 2/3 of production is driven by personal consumption.
• The country has population of approximately 310,232,863 (July 2010).
• Services sector has a major role, and makes up to almost 78% of the GDP, while Industry 20.5% and Agriculture that is less than 1% (2007).
• It has the stature of being a big driver of the global economy.
• Strong decision-making in the Govt. pertaining to initiatives for growth and stability of the country (fiscal and monetary policy).
• Understands the use of supply of money, tax rates, and credit controlling in order to adjust according to the economic need.
• Regulates on private sectors in order to prevent monopolies.
• Renders direct services for national defense, monetary aid and development programs and also releases funds for infrastructure development.
• It is also enlisted as a high income OECD economy (2009) by the World Bank.
• The major industries in the country that also hold a lot of influence globally are: Chemicals, Steel & Iron, Metal products, Electronic equipment, Machinery, Petroleum products, Fertilizers, Plastics.
• Agriculture sector holds products such as wheat, barley, rice, sugar, oats, cotton, tobacco and potato.
• The country has huge reserves of Phosphates, Zinc, Lead, Coal, Uranium and Gold.
• Finance and Insurance take the top priority in accordance to the income.
• Mining; Real Estate, rental and leasing; Finance and Insurance; Retail Trade; Manufacturing; Transportation; Wholesale Trade; make up most of the major sectors in the US economy.
• An insignificant number of people are living below the poverty line (Human Development).
• Every person living in the country has access to improved water resource.
• Literacy rate over the age of 15 is 100%.
• Market oriented economy, which makes the private sectors as the decision makers and providers of goods and services to the Govt.
• The US economy holds flexible grip on its resources, i-e; expanding plants, laying off workers in surplus, developing new products, creating new jobs etc.
• Govt. support and subsidies to some sectors that create an ever more powerful impact.
• Advanced in technological systems; computers, medical, aerospace, military equipment etc.
• Uses open trade as a strong influence over international relations.
• After the 9/11 attack, the US economy showed remarkable flexibility by recovery in 2002 with the growth rate of GDP raised to 2.45%.
• Economic Stimulus Act, that provides economic incentives are provided to tax payers.
• Getting back to normal after the effects of the global crisis (US economic Review 2008).
• Treasury bills accounted for being sold as a means to generating money for government reserves, in order to contribute to economic activities.
• UNDP enlisted US as one of the Top Five ‘Very High Development’ countries.
• Urban development (sanitation facilities etc) stands at 100%.
Weaknesses:
• The country has detected a record of low household saving rate.
• It has a large fiscal deficit that is increasing, external debt was $13.6 trillion (2008), making it the biggest debtor country.
• There is still a significant number of people who live in poverty under the country’s rule, especially unmarried mothers along with their children.
• Disparities in wealth exist.
• Environment remains to be a major concern due to the substantial amount of people lacking health insurance.
• The failure regarding the credit market and housing sector has slowed down the US economy, which holed a punch on the GDP that declined its rate to a mere 0.4.
• Although being called a free market economy, the government regulates certain sectors especially the energy and the agriculture sector intensely.
• Federal Debt is increasing at an alarming rate, which concludes and equates to approximately $13.724 trillion (93.2% of GDP) and makes it $45,000 for each American taxpayer.
• Black population is a vulnerable group as they are being threatened by the global competition, especially in the some traditional manufacturing industries, which has resulted in declining their wages.
• The country has a two tier market for labor, that is many at the bottom line lack the education and professional skills that are regarded for top position managements, hence they fail to get comparable pay rises, health insurance and other benefits.
• Credit markets are weak and are lacking a sustainable amount supply of money to stabilize the economic conditions.
• Katrina put a deep scar on the country destroying a lot of resources.
• The economy suffers from high energy prices, many commodity shortages, and even steeper coffee prices.
• Inflation also affected the economy after the hurricane blasts.
• Due to the Katrina and US-Iraq war, even thought the GDP was unaffected, but different medical and pension costs of aged people and that caused in insufficient investment in the economic infrastructure.
• Exchange rate is also being affected.
• Port of New Orleans, Soybeans, Cotton, Bananas, Shrimp and Oysters, Retailing, Gambling, Telecommunication, Oil, Port of New Orleans, Coffee were highly affected due to Katrina.
Opportunities:
• The country can support different adjustments by strong national saving that would avoid the burden of falling on both investment and growth.
• Even in uncertainty, the workers can be contented with the reexamination of the whole organizing processes in their workplaces along with the role of the government.
• Financial relief can be chucked-out in the form of tax relief.
• Increased funding in sectors such as housing will have a drastic affect in times of crisis.
• Increased spending from the side of the consumers will also initiate great stability and growth in the economy.
• Financial encouragement to the consumers will result in great help to stabilizing the economic conditions of the country.
• The Federal Reserve should deduct rates of interest, to encourage investment.
• The Federal Reserve should introduce measures that would provide the opportunity to push liquidity to various financial markets.
• The government should fund situations that retrieve distraught properties.
• Inflation can be decreased due to the decreasing commodity prices and the decrease in demand in the domestic market.
• The merchandise trade deficit can be decreased in order to decrease the overall deficit.
• TARP (Troubled Asset Relief Program) shows promising results and it can be used to buckle up the economic conditions in hard times as usage of incentives.
Threats:
• The growth rate is forecasted to grow at a lesser rate due to the adjustments for housing sector and the credit crunch, which will also have negative effects on the US export markets.
• The deficit of the country has been coined as unsustainable according to IMF (International Monetary Fund) that would have undesirable effect on the interest rates and capital markets globally.
• The growing economies in Europe and recent developments in Asia which are expanding economies globally, especially China which is forecasted to overtake the US market in size in 30 years.
• Traditional manufacturing industries at loss due to the trade deficit and many setbacks the whole nation has faced.
• Consumers being dependent on debt due to re-mortgaging the properties to attain higher loans.
• Due to the dub-prime market fall, the services sector is likely to suffer a lot.
• Barriers to international markets due to rivals.
• Stock value going down.
• Job losses.
• Rising unemployment.
• Flat wage rates.
• Significant amount of people without pension or health insurance.
• House and mortgage crisis.
• Consumers paying more for basic necessities such as food, fuel, medical care, college tuition etc.
References:
http://www.indexq.org/economy/gdp.php
https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
http://data.worldbank.org/country/united-states
http://hdr.undp.org/en/media/HDR_2010_EN_Complete.pdf
http://seekingalpha.com/article/144442-u-s-tops-list-of-countries-with-the-largest-external-debt
http://www.ustreas.gov/education/faq/markets/national-debt.shtml
http://www.treasurydirect.gov/NP/NPGateway
http://www.businessweek.com/magazine/content/08_38/b4100052741280.htm
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