美国 经济学 论文 指导

Indicators Of Economic Development In The United States Economics Essay

 

美国经济发展中的指标

 

This paper examines the current recession in the U.S. and how it affects the economy, our families, and certain industries. This paper explores the recession that the United States is now experiencing, and how it affects everything from large business like the airline industry to paying for tonight's supper. The author also discusses how we can prevent or slow down future recessions. The paper focuses the recession on a microeconomic scale。

 

Introduction

 

The recession has affected almost everyone in our surrounding community, whether they were impacted directly or indirectly. It has impacted local small businesses, large industries and companies, as well as individuals and families. All people in the economy are impacted by a recession. However, from the current information that I have obtained, it looks as if the economy is on the rise and will soon be back to normal. Recession is a serious issue, but hopefully our current let down in economy has been a learning experience and next time we will be better prepared and can prevent an equal disaster.

 

The current recession is considered the longest since 1947 and due to increased government spending the budget deficits this year is expected to reach $1,600 billion. Government spending in the 2nd quarter increased by 11% and this spending affected the car industry and the housing market. Inventory also declined in this quarter and this reduced the GDP by 1.39%, however when aggregate demand increases the inventory level is also expected to increase.

 

According to the congress budget office the 3rd and 4th quarter level of GDP is expected to improve due to increased government spending and a 1.6% growth rate is expected. However the recovery process is expected to take longer given that those consumers are faced with high unemployment rate, high debt levels and restricted borrowing.

 

Growth versus Development

 

Economic development refers to social and technological progress. It implies a change in the way goods and services are produced, not merely an increase in production achieved using the old methods of production on a wider scale. Economic growth implies only an increase in quantitative output; it may or may not involve development. Economic growth is often measured by rate of change of gross domestic product (egg. percent GDP increase per year). Gross domestic product is the aggregate value-added by the economic activity within a country's borders.

 

Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy, and poverty rates. GDP does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic wellbeing have been proposed (more). A country's economic development is related to its human development, which encompasses, among other things, health and education.

 

For almost two years now, it has become common knowledge to the economic sector that global economy is being dragged through what now seems like a long dark tunnel. A slump in markets was taking minor progress during the first half of 2001, but after the tragedies of September 11, resulted in an immediate economic recession. Nearing the year end, economists were making hopeful predictions for the first and second quarter of 2002. Unfortunately, most were disappointed as the improvement seen was painfully slow, if any at all. Data reports have shown that the 6% consumer spending growth which slightly helped relieve the pain of last year's recession, fell short again forcing many big companies to close down or file for bankruptcy

 

The collapse of the housing bubble, which peaked in the U.S. in 2006, caused the values of securities tied to real estate pricing to plummet thereafter, damaging financial institutions globally. Questions regarding bank solvency, declines in credit availability, and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during late 2008 and early 2009.

 

Economies worldwide slowed during this period as credit tightened and international trade declined. Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st century financial markets. Governments and banks responded with unprecedented fiscal stimulus, monetary policy expansion, and institutional bailouts.

 

All the people of America live in a free and Democratic nation once more, and can get back to inventing, and creating, and innovating science and the economy. Where I see the biggest gap to be filled is encouraging talented people and companies in other parts of the world to move to America once again - a rapid reversal of immigration policy since 09/11. We need to attract and retain a growing proportion of outside talent and wealth in a growing and evolving global economy. At the national level, we will see Democratic leadership shifting funding away from war and a few terror-related industries and toward education, technology, health-care and science. I would expect this to happen in ways respectful of global needs, open standards and best practices - more of an open source approach to solving such problems as AIDS, malaria, contaminated water, poverty and starvation.

 

As our economy grows, in openness and scale, there is an especially compelling potential for Cleveland to surface as one of the world's great cities. The fact is Cleveland is designed to be twice its current population - it is more than half-empty. And the cost of real estate is low as a result of Cleveland being a "shrinking" industrial city. But the new economy for Northeast Ohio and leading centers of America and the world is not industrial but rather knowledge, so as we look to redevelop our economy we need to take an abundance approach. Out greatest assets are our 1,000,000 person-scale assets and infrastructure and now acres of cheap inner city land and 1,000,000s of square feet of underdeveloped and abandoned storefronts and offices and our 100,000 undervalued inner city homes and apartments - this entire city can be bought cheap. And we are on a Great Lake, so we always have fresh water, so are always lush. That may also prove a major source of wind power. We are a great 1,000,000 person city looking for 500,000 more great people!

 

If we recognize the global economy is growing and people will increasingly need new, better places to live, Cleveland can rebuild itself as a model city. It will happen - Cleveland will have 700,000+ people again, within 10 years, and thrive. Over the next 2 years, we really need to work through a master plan for how this transformation will occur. This should include a global planning competition, exploring what Cleveland would look like if it was a major global city again, with $ billions from around the world being spent here to build that visionary city, and then make that happen over the next 10 years.

 

National Income

 

A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), gross national product (GNP), and net national income (NNI). All are especially concerned with counting the total amount of goods and services produced within some "boundary". The boundary may be defined geographically, or by citizenship; and limits on the type of activity also form part of the conceptual boundary; for instance, these measures are for the most part limited to counting goods and services that are exchanged for money: production not for sale but for barter, for one's own personal use, or for one's family, is largely left out of these measures, although some attempts are made to include some of those kinds of production by imputing monetary values to them. Mr. Ian Davies defines development as 'simply how happy and free the citizens of that country fee.

 

The global economy outperformed our wildest expectations on all counts during the late 1990s. We did experience a shallow recession in 2001. But, since 2003, we have been in full recovery. The Fed’s attempt to relate the economy after the Tech Bubble by reducing the Fed Funds rate to 1% was successful beyond our wildest dreams. However, this aggressive policy never allowed the inherent disequilibria in the 1990s macro economy to dissipate. As a result, we have what appears to be an ‘echo’ bubble in housing which has just popped. As asset price inflation has been the major factor holding up the economy, this does not portend well for sustained robust economic growth in 2008.#p#分页标题#e#

 

The asset bubble of the late 1990s was one of the largest in history. Rather than allow this bubble to fully unwind, the Greenspan Fed created more asset bubbles, especially in housing, leveraged finance, private equity and asset-backed securities. It is possible that the U.S. will escape with a garden-variety downturn, but, in the face of one of the largest asset bubbles of all time, this is unlikely. In the end, a margin squeeze from high energy prices or a dollar shock could be crucial factors tipping us into a downturn. However, ultimately these factors will be merely the catalysts; the true cause of the expected malaise in 2008 lies in the imbalances in an asset-driven economy.

 

This downside scenario was not predestined. Unfortunately, crucial policy errors by the U.S. Federal Reserve all along the way have had led us to a ‘point of no return.’ The global economy, now supported in the main only by the overextended U.S. consumer, finds itself at stall speed, susceptible to any number of potential exogenous shocks. Ultimately, the economic malaise created by this confluence of events will take years to unwind. A positive outcome to this process is dependent wholly on liquidation of excess credit and consumption. This process will be extremely painful in the short term, but will lead to a healthy economy long-term.

 

Unfortunately, experience shows that these painful steps will only be taken as a last resort. Moreover, geopolitical events become volatile in a world of economic insecurity, leading to political upheaval and protectionism. Protectionism is a natural outgrowth of nationalist economic policy as it transfers wealth from foreign producers to domestic producers by cutting off access to lower cost excess capacity in the goods in service sectors. However, this also serves to transfer wealth from domestic consumers to domestic producers by increasing the price of goods in the protected sectors, ultimately reducing consumption demand. The U.S. economy, as well as the world economy, is proving to be most resilient. This has persuaded most observers to expect moderate economic growth of 2 to 3 percent and a moderate inflation around 2 percent for years to come, while unemployment remains at a thirty year low.

 

The consensus among strategists is now to bet on international competition and productivity gains to keep costs and prices tame, and on a lower dollar to improve the trade balance; they place their hope on a relatively simulative monetary policy to keep consumption and investment spending up and expect the worst of the housing decline now to be over. They also think that crude oil prices peaked near $80 a barrel in July 2006 and that excess oil supply will keep energy prices low under $69.50 after the current Fibonacci rebound and the completion of a big head and shoulder top.

 

With stock prices making new highs, some point out that cycles are favorable to higher stock prices, since investing during the 27 months before a U.S. presidential election has proved in the past to be more profitable than investing during the 21 months after the elections. With such a rosy scenario, call it scenario A; it is not surprising that many investors are enthusiastic about financial markets, some expecting double-digit earnings growth this year and next.

 

While one may hope that economic conditions remain favorable or even improve, the conditions for another less rosy scenario, call it scenario B, are also present and could unfold in the coming months, if certain potential shocks were to materialize. What probability can we assign to such an unraveling scenario B? It is hard to say, but personally I would give it one chance out of three to occur. Why?

 

Thus, what could be the reasons for slower economic growth in the coming months? First, the artificial short term stimulus that the Bush-Cheney administration gave the economy before the 2004 and 2006 elections, through a combination of large tax cuts and large increases in military outlays, is about to run its course, and the piper will have to be paid. Second, record budgetary and current account deficits have severely neutralized the Fed's monetary policy stance because interest rates cannot be reduced substantially for fear of a collapse of the U.S. dollar (and a resurgence of imported inflation); while fewer stimuli is expected from the federal budgetary deficits as they are being slowly reigned in.

 

Third, all this is taking place at the same time that the construction industry is in disarray and housing prices have tapered off or are declining, while the Kuznets real estate cycle decline that began in 2005 is expected to last until 2010-11.

 

Fourth, this raises the question of how long the American consumer will keep up the high pace of spending in such a context. During the years of the housing boom, consumer spending was driven by the accumulation of wealth and record consumer indebtedness, most of it in the form of mortgages, as the price of houses increased. Now that the reverse is occurring and foreclosures are on the way up, a retrenchment in consumer spending cannot be ruled out. Logically, especially with consumer confidence crumbling, this should be expected.

 

A fifth factor is now entering the picture to make matters potentially worse: The protectionist push from the Democrat controlled Congress risks putting in jeopardy the flow of capital of about $2 billion a day that the U.S. economy is borrowing from abroad, mainly from China and Japan. Looming trade frictions between the U.S. and China could force the Fed to raise interest rates, and not lower them as most observers expect—in any case, the Fed would surely not lower them as much as it would be warranted to alleviate the housing crisis.

 

All that is needed now to complete the picture, as a sixth factor, would be the collapse of one and possibly several major financial institutions under the pressures of bad loans and record foreclosures. Particularly at risk is the some $2.5 trillion mountain of debt concentrated in subprime and Alt-A loans. Already, one major sub-prime lender (New Century Financial) has filed for Chapter 11 bankruptcy protection. Others are likely to follow, because 2007 is the year when a large number of sub prime real estate loans have to be renegotiated at higher interest rates.

 

The rate of foreclosure is bound to spike in the coming months, possibly culminating in the next two years into a financial hurricane. A seventh geopolitical factor could also throw fuel on the fire. Indeed, if the clumsy Bush-Cheney regime goes ahead with its neuron plan to bomb and attack Iran, the coming U.S. economic slowdown could be transformed into something much worse. Indeed, during the coming years, the world economy will have to adjust to a peak in oil production and to higher energy prices, after the current lull.

 

If geopolitical mistakes turn the richest oil-producing region into a hot war zone for many years to come, the worldwide economic consequences will be disastrous. What does it all mean in practice? It means that while extrapolating the past is often a good way to see into the future, it does happen that major turns can occur anytime, when conditions are ripe and nobody expects them.

 

For example, the April 1960-February 1961 recession followed the end of President Dwight Eisenhower's second term. Nothing in the presidential politics cycle therefore precludes a 2008-09 recession. The above scenario B can likely be avoided if no major shocks, such as a premature oil production peak, large financial bankruptcies or a U.S.-Iranian war, do not materialize. If they do, however, all bets are off. It would seem only prudent to prepare and take measures for the possibility of such a less palatable scenario occurring.

 

Development

 

It is that time of year, when I throw caution to the wind and present my annual forecast issue. Jumping to the conclusion, I think a recession has begun, so the relevant question is to ask when the recovery will begin. This year, it is "Recession and Recovery." I think we've entered a recession. As I've been writing for over a year, I think this will be a mild recession, but the recovery period will be prolonged and slow. My best guess now is that the recovery will begin in the third quarter of this year.

 

The National Bureau of Economic Research is the final arbiter of when recessions begin and end. However, it will be at least a year and more likely 18 months before they give us a decision. By that time, we will be well on the road to recovery. So, let me make my case that we are in recession. The Bureau of Labor Statistics put out its monthly employment report today. The consensus forecast was for 70,000 new jobs. BLS came out with only 18,000 jobs, promptly putting the market into a funk, with the Dow falling 256 points. Since the economy needs to create about 150,000 jobs a month just to account for growth of population, today's employment numbers are quite anemic. But it's worse than the headline number would indicate.

 

The Bureau of Labor Statistics actually does two different surveys. One is called the payroll or establishment survey, which is comprised of calling approximately 160,000 businesses (out of 9,000,000) and seeing how many workers they have that month. They survey enough businesses to cover about 1/3 of non-farm employees. And that should be enough to get a good idea of where things are going, right? Close, but not exactly. They do not contact very many small businesses, and of course cannot call new businesses. And since small and new businesses are the engine of job growth in the US, it is important to include an estimate for them. And they do this by estimating the number of new jobs in various categories that are created or lost by means of something called the birth-death (BD) ratio.#p#分页标题#e#

 

The BD ratio estimate is based upon past history. While estimating the most recent month's employment picture is quite difficult, you can do an accurate job when you go back a few years, using other government data, tax information, etc. And so you can create a trend for how many jobs you miss due to the birth and death of jobs in the small business area. Now, remember, that number is an average of many years of history. As an average, it is accurate over long periods.

 

However, there is one flaw in this methodology: it will tend to underestimate new jobs when the economy is recovering from recession and overestimate them when the economy is slowing down. Thus, in 2003-4, the Democrats were beating up Bush about the jobless recovery. As it turns out, those employment numbers were massively revised upward a few years later. There was in fact a powerful recovery going on, just not in the statistics. However, nobody but a few economic geeks paid attention, as it was last year's news.

 

This month the BD ratio created 66,000 new jobs for the establishment survey, or 48,000 more jobs than the headline number. Let's look at a table directly from the BLS web site. Notice that the inventory of new homes is continuing to rise. Also, that new home sales have not fallen to the level of 1991. There is still significant potential downside for new home sales.

 

Separate work by Shilling suggests that some 2,000,000 excess homes have been built over the past decade. These have been bought by speculators and people who we are now discovering they cannot afford to make the payments on the homes. Low rates, rising prices, and reckless lending standards spurred an irrational rush into housing speculation, and sent the wrong signals to builders, who responded by overbuilding.

 

New home construction is still way too high given the inventory levels, and will fall further. It is way too early to call a bottom of the housing market, or a recovery of home builders. Now let us look at the next chart:

 

Shilling projects housing prices to drop by about 25%. Some will counter that Gary is way too bearish, but Bank of America estimates are not far from that. Professor Robert Sheller of Yale, who created the S&P Case/Sheller index which tracks housing prices, recently suggested in a Times Online article that homeowners have lost about $1 trillion and could lose three times that much over the next few years. That is consistent with a 20-25% drop in home prices.

 

Vacant properties are at an all-time high. Speculators who bought homes to flip are now in a cash crunch. They can either rent at a loss, or see their homes foreclosed. This is going to create a real oversupply of homes for at least several years

 

Conclusion

 

In such times of global recession when everyone is trying hard to survive and pass through one of the toughest phase of their life, no one thinks about making the profit out of adversity. Everyone is trying to survive and it will be survival of the fittest. Anyone who will be able to pass through this will come out as a stronger entity or person or country. Companies are no exception to this rule. They are also trying hard to survive. With them they are also trying to float and swim through as many people as possible but certainly not all. As a part of cost cutting, some of the employees need to be laid off so that the company and others can survive. Similar things happens in a lift, when it is overloaded; ship, when it is sinking and even airplane, when it is overloaded and etc. Something or someone needs to go out for the rest of them to survive. Good time and bad time will always be there but when we pass through the good phase of our life we forget to prepare for the bad time. We get carried away. We do not plan for our future and difficult times lying ahead and crisis and adversities are part and parcel of our life that we cannot run-away from. Recession of one such crisis and we need to prepare ourselves for all such adversity.