ECONOMICS

PEST Analysis



PEST Analysis

USA PEST

Political

In November 2010, Republicans made sweeping gains in the mid-term elections, regaining control of the House of Representatives.

The US has a low ranking in terms of political stability and absence of violence. The country is high on the list of nations susceptible to terrorist attacks, while its international policies to fight terrorism have aggravated the situation.

Economic

According to the Congressional Budget Office (CBO), the US government recorded a budget deficit of $1.3tn in FY2010, which amounts to around 8.9% of the country's GDP. CBO forecasts indicate that the country's budget deficit will increase to 9.8% in 2011.

The Federal Reserve has held benchmark overnight rates in the 0-0.25% range, and interest rates have remained at the same level since December 16, 2008. In April 2011 the bank announced that it will persist with these interest rates, and it has also decided to leave discount rate unchanged at 0.75%.

Social

The demographic transition of the country poses challenges. The rapid increase of people who are above 65 years will begin in 2011, when the baby boomer generation starts reaching that age. This trend will continue for many years. The US remains an inequitable society, with the richest quintile making six times as much money as the poorest quintile in 2007.

Technological

The US's leadership position in terms of innovation is clear, due to the fact that it is home to 1/3rd of engineers and scientists throughout the world, and accounts for one-third of global R&D expenditure. Technological innovation within the private and educational sector has been increasing, with each sector accounting for 70.0% and 14.0% of domestic innovations respectively.

Legal

The World Bank's 2011 Doing Business report ranked the US fifth with regards to ease of doing business. The country's economic policies are generally pro-business and its financial regulatory system is well-developed, with the financial markets being open to competition. However, high tax rates and the differential federal tax rates are major dampeners for business.

Green

President Obama's 2011 budget proposes tripling federal support for nuclear energy by adding $36bn in new loan authority for a Department of Energy program aimed at accelerating the construction of new reactors. US has taken measures to cut down emissions but it is facing poor growth in renewable market because of ineffective enforcement of law. USA has effective measures for greenhouse emissions but there are harmful waste management practices. There have been numerous times when nuclear as well as medical waste have been dumped into the sea This practice have been a source of problem for many since it is said to be a global hazard and have no apt technology to continue with it.(Daly, 1997).

Discussion

Since the middle of 20th century, the US has been dominant global power in economic, political, military, scientific, technological, and cultural affairs. The country has successfully become a technological leader through the early adoption and propagation of information and communication technology. Meanwhile, its military might is absolute, and an extensive network of regional alliances and security arrangements ensures its diplomatic power...