Introduction Economic recession is a cycle in business in which there is relatively lower economic activities in the business market. Such was the experience that the economy of the United States faced in the year 2009 following the crisis that was realized in the housing market. Though a recovery has since been realized, macroeconomic factors have been players in the housing bubble and the realized recovery. This paper seeks to discuss the macroeconomics of the United State’s economy. The paper will look into circumstances that led to the collapse of the United States housing market, classifications of macroeconomic indicators and possible steps towards economic recovery of the United States. Factors that led to the Collapse of Housing Market The collapse of the housing market was considerably a culmination of factors that had accumulated in a system for a long period of time. One of the causes of the crisis was identified to be the policies that were over time adopted by the country’s policy makers. Government policies made over the last three decades in the mortgage sector had, for instance, been geared towards pushing financial institutions towards increasing the level of financing to the general public. These policies thus pushed the institutions to offering loans to individuals who even failed to meet required credit worthiness levels. Legislations such as the “community reinvestment act” of the year 1977, for example, called for financial institutions to make lending advances to the communities in which they operated. The consequence of the legislation was that if an individual applied for a loan then the institution could have no option but to comply with the application or risk being accused of violating the country’s constitution. This move thus forced banks and other financial institutions to offer risky lending. The result was an increased borrowing that was invested in the housing sector. This eventually had a destabilizing effect on the market owing to the market forces of demand and supply (Gordon, 2008). The Federal Reserve was equally accused of fuelling the eventuality of the collapse in the market through steps towards destabilization of the housing market. Though the move might not have been direct or intentional, it played a role to the change in demand in the housing market. In a move that was viewed as a step towards stabilization of the economy, the public was to be empowered into investments through lowered rates. The reduced rates also contributed to people’s motivation into taking loans which were directed towards the housing market. This is particularly because the loans were made affordable to an increased majority that had previously feared the previously high rates (Murphy, 2008). The capitalistic system of the American economy is also a factor towards the crisis that was realized in the housing market. The fact that money value as well as the flow of capital is determined by the Federal Reserve rather that the market demand and supply for money also pushed the responsibility to the hands of the federal government and the Federal Reserve for the crash in the market. Since the Federal Reserve determines the flow of capital in the economy