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U.S.Debt Will Hamper Business Growth Locally, Globally

Businesses expecting to limit growth strategies until U.S debt is resolved.

The growing debt in the United States is not only posing major issues for companies throughout the country, but also several firms across the globe that rely on the strength of the dollar and conducting business with U.S.-based corporations. According to a recent study conducted by the American

The growing debt in the United States is not only posing major issues for companies throughout the country, but also several firms across the globe that rely on the strength of the dollar and conducting business with U.S.-based corporations. According to a recent study conducted by the American Institute of CPAs and Chartered Institute of Management Accountants that surveyed 1,300 Chartered Global Management Accountant designation holder, the U.S. debt debate is limiting stateside businesses and is causing them to adjust their plans for the upcoming year.

Nearly half of the respondents said their organizations are maintaining the status quo as they await action in Washington, while 43 percent stated their businesses are holding off on bringing in new employees and 39 percent said their companies are holding cash and postponing capital investment. Issues such as these could already hurt the already volatile American economy, bringing down the country as a whole. 

"The repercussions of U.S. debt ceiling and spending decisions will reverberate across the global economy and may touch many of the world's businesses," said Barry Melancon, CEO of the AICPA. "Management accountants are bracing for short- and long-term implications, even as they look for ways to make their businesses less vulnerable to the pulses of geo-political forces."

U.S Businesses Will Have to Pick Their Spots
The U.S. debt crisis is making it difficult for CEOs to forge on with their companies' growth plans and find ways to changes processes that can help them through turbulent times. The research showed 57 percent of respondents agreed that their organizations must seek new ways to be resilient and less susceptible to macro-economic volatility, while only 4 percent of survey participants don't believe a lower credit rating and a weakening of the dollar will affect their business at all.

"Indeed the seizing of opportunities is key to long-term survival and so we must all plot a suitable course between risk and innovation, managing the approach and mitigations put in place to address these uncertainties," said Charles Tilley, chief executive at the CIMA

U.S. Has Earned Weaker Global Position
Borrowing
continues to present challenges in the U.S., and the problem with debt in the country will almost surely lead to more of it. If the government truly wants to reduce the problem with debt, it must enact productivity improvements in government services and unite as one to put an end to the divided government, wrote Kenneth Rogoff, professor of economics at Harvard University and the co-author of This Time Is Different, for The Financial Times.

"The root problem is not just a hugely elevated level of public debt, or a patently unsustainable trajectory for old age entitlements," wrote Rogoff. "It is an electorate deeply divided over the direction of government, with differences compounded by changing demographics and sustained sluggish growth."

Is your business prepared to confront the problem with U.S. debt head-on? How do you plan to proceed with many firms slowing down operations until the U.S. debt debate is settled?

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