The economic crisis that swept across the globe also affected the United States in a big way. As early as 2000, the US had already started experiencing a financial crisis that no one took as seriously as was expected. The economic crisis has affected many aspects of the US economy. Although the worst part of the crisis seems to be over, there is no denying the impact it had on the whole of the US economy (Wolf, 2009).Companies have been forced to close down while thousands of people have lost their jobs and found themselves in bankrupt situations. Inflation has shot up and the national debt has risen to unprecedented levels (Moseley, 2009). This paper looks at the impact of the economic crisis on the economy of the US and the government’s budget situation.The housing industry was probably the worst hit by this financial meltdown. House prices dropped to unprecedented lows during the economic downturn. This had a profound impact on the GDP growth in the country. The slow economic growth has further resulted in high unemployment levels never seen before. Construction activities have slowed down considerably and there are thousands of unsold homes all across the country.The drop in home prices has affected the personal wealth of a lot of people. Most homeowners rely on their homes as the sole source of income. The equity for these homes also serves as the collateral that many people use to get home loans or any other loans. This means that since the value of homes has declined, most people cannot borrow loans when they need to. This has led to a reduction in consumer spending level, which has in itself slowed down the economic pace.The falling home prices also precipitated a crisis in the financial markets and a disastrous credit crunch. The foreclosure filings are increasing every single day and the situation does not seem to be getting any better. More people are filing for foreclosure.
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