A Look at the State of the Economy
Differing perspectives are common in looking at what is happening with the state of the economy. Some look at it encouragingly, saying things are looking up. Others have a more negative outlook, saying that sure, things might look better right now, but it is certain not to last. What is the real way to look at all the figures we see quoted about the economy?
Sometimes, figures can be interpreted to "prove" what one wants to say. For example, in December, 2008, the National Bureau of Economic Research (NBER) announced that the country was in recession. Recession, by standard definition, is a period when the Gross Domestic Product (GDP) has declined for two quarters. However, the decline that the NBER was basing their announcement on was actually less than 1/8 of one percent per quarter. This is not considered significant enough, because it could very well be due to the validity of statistical analysis. So, are we in recession or not? It depends on who you listen to.
Before the severe downturn in the economy in September 2009, the economy seemed to be pretty stable. There was very changes, showing as nearly a straight line when show as a graph. Trends dropped significantly during that quarter, but immediately went back up. The reporting of trends on an annual basis instead of by corresponding quarters made the conditions seem worse that they actually were. There is the possibility that the federal government requested the reporting of statistics in such a way as to suggest that the recession had ended.
Some aspects of the state of the economy have improved and some have not, and may even get worse. One area where economic trends are improving is in the rate of disinvestment, which is where businesses sell off inventory without ordering replacements. An area where the economy is still poor and threatens to stay that way or get worse is in the area of unemployment.
During the economic crisis in the last quarter of 2010, businesses were not replacing inventory, which is disinvestment. It got really severe. However, at the end of the first quarter in 2010 it was back to almost the level prior to September 2008. It went from a negative 19.7 billion to a positive 31.1, which was a growth of 50.8. This caused economic speculators to have a more positive outlook.
Even though disinvestment improved, unemployment has not, and it doesn't look like it may show any significant improvement in the near future. Decline in employment held pretty steady through all of2007 and 2008 at about 0.1 of a percent, until the disaster of Sept 2008, when it dipped to over 0.5 of a percent. It climbed back up to 0.3 of percent, it has held pretty much steady, varying less than 0.1 of a percent from month to month. It appears that it may hold steady for a time, though it is not back to the pre-2008 level.
Possible causes of the effects on the state of the economy need to be considered to fully understand what is happening in the economic world. State and municipalities are going bankrupt, due in part to the fact businesses are not hiring, meaning less taxes to support the governments. They must resort to raising taxes because they can't borrow or just print more money like the federal government can. In addition, municipalities are being hurt by the decline in housing costs.
One person may see the state of the economy as improving, while another may see it as declining or as being static. It does appear that some overstate the trouble the economy is in. The figures do make it appear to be showing some improvement is some areas.
Article Source: FxTradingStock.com
About the Author
Your way out, due to the State of the Economy, could be to work from home in your own business. For more ideas on working from home, and free training, visit my blog at Stephen Huston.com
by: Stephen Huston
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Word Count: 618
Date: Thu, 16 Dec 2010
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