The Most Important Issue for the US Economy


This essay discusses the most salient issue facing the Federal government. Unemployment is ranked among the highest challenges facing the Federal government. The increase in the unemployed population serves as an impediment to the economic growth of any given economy. Hence, the federal government should rise to the occasion; by implementing fitting policies to mitigate the issue. When left unchecked, the issue will give rise to major social issues in society such as crime and poverty.

For the federal government to realize rapid economic growth and a decrease in unemployment, major initiatives should be undertaken. The initiative should include establishing industries, investing in youth to be job creators and increasing unemployment benefits. These strategies will help in preventing the unemployment issue in the country.

This essay identifies unemployment as a major issue affecting the federal government. The paper explores the issue by illustrating the causes and effects of unemployment on the population and the country at large. Further, the paper illustrates the role of the federal government in easing the problem.

Causes and effects of unemployment

According to Wind (2009), unemployment or lack of jobs at any given time cannot be at a zero rate as it takes time to match workers and employers. The normal rate of unemployment in the USA is five per cent, but the recession in the last few years has seen this rise to about eight to nine per cent (Wind, 2009). The economic downturn springing from the credit crunch contributed to a drop in business investments and consumer spending. This consequently resulted in reduced demand, hence, most industries decreased spending by reducing working hours. They also fired some of the employees. The housing bust in the USA was another key cause of unemployment. The significant drop in demand for new housing and commercial floor space affected employment in the construction sector (Wind, 2009). Hence, according to Wind (2009), unemployment is unavoidable in modern economies where success is entirely dependent on technological advancement and economic changes.

Unemployment has resulted in a significant economic burden on households as it deprives them of the current flow of income. This, in turn, has contributed to lowered standards of living and psychosocial hardships whilst affecting capital and investment accumulation. In most cases, an unemployed person is a skilled/a professional who is capable of working efficiently hence, time in unemployment translates to the loss of productivity (Gangl, 2003). One of the concerns of unemployment is duration. This indicates how long an individual remains unemployed. The prolonged duration of unemployment makes an individual seek an alternative to compensate for the loss of income either through personal assets or social welfares support. Also, the probability of re-employment is known to reduce with increased unemployment duration (Gangl, 2003).

Role of the federal government in reducing unemployment

The federal government operates at the level of the state, providing service to the public. To curb the issue of unemployment, the federal government can play a role by increasing government-owned corporations and investments (Holcombe, 1996). This would increase the task force needed in a particular state. The federal government also can assist by enhancing their unemployment benefits which are given to employees who lose their jobs. This would allow for the sustenance of unemployed people and their households as they seek re-employment.


Unemployment is inevitable where the industry is dependent on advancing technology and economic changes. When there is decreased demand, industry decreases productivity that also translated to reduced working hours and unemployment. The solution to this is the government increasing investments that can create jobs and increase demand in the market.


  1. Gangl, M. (2003). Unemployment dynamics in the United States and West Germany: Economic Restructuring, Institutions and Labour Market Processes. Berlin: Springer Publishers.
  2. Holcombe, R. G. (1996). The growth of the federal government in the 1920s. The Cato Journal, 16(2)
  3. Wind, S L. (2009). Unemployment in 2009 and its Implications for the U.S. Economy.
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