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Showing posts with the label economic activity

Lower Oil Prices and Optimism Fueling Consumer Spending

The 4th Quarter saw a slow down of growth from 5 to 2.6% but consumer spending popped up 4.3%. This is good news as 70% of the economy functions from consumers spending. Growth might have slowed in the 4Q but people are more optimistic about their future and this can create positive signs for economic growth in the first half of this year. According to Sam Bullard a senior economist at Wells Fargo, " Sharply lower oil prices do present downside risk to business investment, but accruing benefits to the consumer in the form of lower gasoline prices should increasingly offset the near-term drag ( 1 )." As consumers save money at the pump and heat on their homes they are naturally going to spend that extra money somewhere. Americans are not great savers. Nearly 75% of people live pay check to pay check while only 25% have enough to cover 6 months of expenses ( 2 ).  If we aren't going to save that money most likely it is going to be spent somewhere. We love to eat, b

The Importance of Export and Taxes in Economic Growth and Government Budgets

Export and taxation are fundamental aspects of the American economic engine. Exports help create wealth that results in increased employment and tax generation. Government relies on taxation to pay its bills and keep the doors open. When exports wain and job creation slows both the economy and government suffer shortfalls that make their way into government spending crisis. Ignoring exports in the debate on taxes is like ignoring the cow when discussing how to produce milk. The news is aflutter with the upcoming debates on taxes and budgets. How to cut back, how to spend more wisely, and how to reduce waste are just some of the discussions. These are important debates and questions for a nation that desires to ensure that government is not so top heavy as to suck an unreasonable amount of resources from the economy. Yes...government does cost money and more government costs more money. Finding the right balance between enough government to ensure proper national management while no

Improving Consumer Confidence and 3.5% GDP Comes with a Warning

The economy took a jump from July to September as Gross Domestic Product (GDP) calculations rose 3.5%. This is great news for those hoping to finish off the last of the recession and move onto more prosperous times. This improvement is the largest in a single quarter since 2003 and parallels higher levels of consumer enthusiasm. Positive news also comes with a warning to redirect focus to balancing budgets, encouraging long-term economic growth, and reducing income disparity.   To add to this positive news the University of Michigan’s consumer confidence index also jumped to 86.9 in October when compared to 84.6 in September.   With GDP expanding and consumer confidence rising few can argue that the world’s super power isn’t regaining economic ground.  Measuring economic growth often rests on imperfect numbers such as GDP that can create improper assumptions among decision-makers. GDP is seen as the total market value of the goods and services produced by a nation over a c

Can the U.S. Be an Export Nation in a Difficult International Economy?

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The IMF says the global economy will grow slower than expected this year while another recent announcement states that China superseded the U.S. in terms of purchasing power this year. Both are game changing events in what appears to be a long played out economic drama. Even though the news is not positive it does provide an opportunity for the U.S. to focus on improving its infrastructure to lower costs and retool for better managing international markets.    Slower International Economic Growth: International markets are expected to experience slow growth in the near future according to an October 7th report by the International Monetary Fund (IMF). The IMF initially thought the world economy may grow as high as 3.7% this year but have revised that number down to a weaker 3.3%. The slowing economy could make it more difficult for companies that are trying to export overseas to locations where the economy is lack luster. Growth in advanced economies and emerging eco