Why the United State and Europe might face a long period of slow growth, high unemployment and deflation.


Whythe United State and Europe might face a long period of slow growth,high unemployment and deflation.

Accordingto a report by the IMF on the observed slow growth, deflation, andhigh rate of unemployment in the world economies, it was noted thatthe situation would remain the same or change for worse in futurebased on the various obtained statistics. The main cause of thisproblem particularly in Europe and the United States can beassociated to an aging population and the declining rate ofproductivity. The global recession being experienced mainly by Asiangiants such as China and Japan has weighed down growth in Europe andthe United States (Hukkinen42).

Thecost of living in the United States has increased since June 2009,and is projected to increase over the next decade. The economies ofUS and Europe are dominated by deleveraging in the private sector andfinancial institution, which is highly deflationary, and affect thevarious stimulus programs, put in place by the respectivegovernments. Europe is currently in a period of recession, while theUnited States has continued to report an annual increase in real GDPHukkinen42).

Accordingto a report by Bloomberg on why global economies are facing a periodof deflation, fertility rates and aging population are seen as themain contributors of this stagnation. The report also states thatsubstandard education systems both in Europe and US have restrainedproductivity, growth and employment (Shilling). Both Europe and theUnited States have put more emphasis on housing, financial assets andconsumer spending rather than investing in education and researchwhich can enhance productivity and propel growth. In a surveyconducted by General Electric Co. on 3000 business executives from atotal of 25 countries, it was found out that 71% of the totalparticipants wanted government protection to encourage domesticinnovation a practice that has been observed to slow growth of globaleconomies (Shilling).


GaryShilling. &quotWhy Global Economies Face an Age ofDeflation.&quot&nbspBloomberg.N.p., 20 Mar. 2013. Web. 28 Oct. 2016.

Hukkinen,Juhana. &quotEconomic policy options in conditions of weak growthand low inflation.&quot (2014).