The biggest challenge facing your national economy today Essay

The biggest challenge facing your national economy today - Essay Example Almost every economy in the world is somehow related to the US economy and therefore, even a minor effect on it could have larger impacts on the economies of different countries. There are a number of problems and challenges being faced by the economy of United States today. The biggest problem, however, is the increasing debt which is considered to be the largest debt to be faced by any country. This includes household, local and state government as well as federal government debt. This debt has been accumulated over the past thirty years and has been growing much faster than the overall level of GDP. This poses serious threat for the economy as sooner or later this debt bubble will burst just like the housing bubble which led to the financial crisis in 2007. The bursting of the debt bubble will cripple the entire economy as it has become dependant on borrowing and debt. Nearly all the transactions of the economy is done on a credit basis, adding to the overall national debt. A burst of this bubble would affect the increasing standard of living being enjoyed by the citizens of America today. The household debt has increased by about 1700% since the year 197 1and around 46% of Americans are dependant on credit cards (Michael, June 2012). The second component of the national debt is the local and state government`s debt has crossed the 3 trillion dollar mark as most of the state governments are becoming bankrupt due to the increasing level of debts. Along with this, the federal government has been facing a hug amount of debt as well which has reached the dollar 16 trillion mark. In the recent years, around 3 trillion dollars of debt have been added to the overall level of national debt. The percentage of national debt is said to get more than double if the amount of household, federal and local governments` debt continues to rise at similar rate. Similar cases of increasing debt have been observed in Greece,