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Showing posts with the label economy

Can Innovative Clusters Protect the Economy from Recession?

Recessions can be brutal and countries often suffer from the magnitude of global changes and shifts that can impact their economic well-being. While they search for solutions to strengthen their economic position among lower cost emerging nations they should consider the benefits of developing clusters. According to a study entitled Coping with Economic Crisis-The Role of Clusters published in European Planning Studies , clusters offer a ray of hope in fortifying an economy from recession. When the global economy adjusts there will be winners and losers. Some nations will pick up additional manufacturing while others will lose manufacturing. When times are good more people will be employed, while when times are bad people will be unemployed.  Europe and the U.S. has lost jobs over the past few decades due to the cheaper cost of manufacturing in places like China, Asia and India. The only true competitive position that Western countries can make is to be more innovative and develop

Middle Class Anxiety? A Factor of Employment and Savings

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The middle class is the backbone of American society. It is a large slice of American pie that builds our cars, delivers our products, and sells us our next gadget. Like other classes, the middle class has their own concerns and fears over employment opportunities and the ability to put money away for the future.  Helping them transition to the new economy can go a long way in saving people from pending grief. According to a Pew survey 47% feel they are solidly middle class, 11% upper middle class, and 29% lower middle class (As cited in Novak, 2015). Only 1% considers themselves upper class while 10% viewed themselves lower class. Entry into middle class is still an important part of the American dream and forms our class consciousness. Without doubt the world is changing and jobs will change with it. A person in the middle class, earns around 30K to 100K per year based upon the state, obtains a college degree or trade certificate and can normally find gainful employmen

Will China Experience a Prolonged Period of Slower Growth?

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China's greatest asset to growth was its cheap manufacturing base that drew investment and interest in low cost alternatives. Globalization is stripping China of this advantage as other nations find their own competitive ground. China will need to adjust its economic strategy to help it find sustainable growth that doesn't rely heavily on foreign capital accumulation. Changing their investment policies and encouraging long-term solutions will be more helpful than short-term strategies in the next phase of China's economic life. China has been known as a great place to produce products because of a business friendly government, lower labor costs, and less environmental restrictions. This cheaper cost alternatives encouraged foreign companies to outsource simple manufacturing of parts to Chinese companies. This create a net influx of foreign dollars that fuel growth over the past couple of decades. The country's production capacity was based on its ability to partne

The Economy Moves from Unemployment to Increasing Wages

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As the economy speeds up  Federal Resereve Chair Janet Yellen discusses the growing need to increase interest rates. For now the idea will be reevaluated on a meeting-by-meeting basis to determine when that might happen. Her discussion with the Senate Banking Committee eludes to the idea that her annual target rate will be somewhere around 2% depending on the strength of the economy. For the near future the economy is expected to continue growing.  The market forces related to the speed of the economy will determine these rates. Interest rates are the cost of borrowing money and is primarily based on demand and supply. As money is soaked up in the economy it becomes less liquid and shortages begin to raise the cost of borrowing that money to mitigate risks. For example what you pay for a car today would cost you more tomorrow as the product price rises. You wouldn't get that money for free without paying some type of interest on it as the lender takes risks. Getting money tod

Americans Think the Economic Chalice is More than Half Full

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As Americans we can be a skeptical crew about a whole lot of stuff. One thing we seem to feel good about is future opportunities. According to a recent Gallop Poll 28% think the economy is good, 28% think it is poor, 51% believe it is getting better and 45% feel that it is getting worse ( 1 ). For seven straight weeks the consumer economic beliefs have been in the positive providing good news to those who feel the economic chalice is over half full. The numbers may depend on who you are, your income and education level, as well as your personal disposition in life. Those who are in fast growing industries who are finding their job prospects and income rising may feel more optimistic than those who are negatively affected by shifting economic activity. If your in the wrong occupation and see your prospects dwindling there isn't much to look forward to as a growing economy isn't going to directly benefit you. The same can be said with those who have not either learned a ski

U.S. CEOs Optimistic About the Economy and Plan on Hiring

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America is pulling ahead as CEO's project a much brighter future with more hiring and greater investment. According to a report by the Young President's Organization (YPO) the U.S. bucked trends of other nations by raising their confidence index from 64.2 to 65. This optimism is a full two points above other countries and has prompted some positive decisions in company strategic planning that will bode well for the American worker. Net importers of oil were more optimistic than net exporters. The reason this is the case is because exportation of a natural resource can be lucrative but is also unsustainable and limited. Those nations that reaped the rewards in the past may find their economies struggling now that prices are changing and demand is less. Importing nations find the cheaper oil prices an advantage for their production and economy through lowered input costs. The report had three interesting expectations over the next 12 months that include: -70% Sales to In

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

How Will Political Instability Impact Yemen's Economy?

Yemen’s investment opportunities were not necessarily strong before the recent ousting of the pro-American president by the Shia faction Houthi. That investment climate is even more uncertain now. As one of the world’s least developed nations the loss of investment could push the country further into poverty which contributes to greater in-fighting and instability making tribal regions open to foreign influence at the expense of a centralized government. The long-lasting impact of investment opportunities will make themselves more apparent in the future as the nations tribes and factions determine what routes they are going to take in settling disputes. Any long-lasting heated conflict will likely ensure that investors do not put their money into a politically unstable nation heightening local fighting over resources. Land grabs and resource confiscation could lead to civil war. Yemen has always been seen as a risky place for international businesses investment so recent instab

Discussing Parks as a Place of Value Through Poetry

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Poetry offers a new way of looking at the same thing. A new perspective with enough feeling or insight to challenge our previous assumptions. It doesn't really matter much what the topic of discussion is as poetry is about everyday life. In this case poetry can be about parks and their value to the environment both financially and aesthetically. Parks and landscaping are used to improve upon the environment. They cost a significant amount of money to build and more money to maintain but they are worth it. There is a reason why we are so attracted to parks and why we as humans enjoy them. We enjoy them so much that those neighborhoods that have parks and landscaping are worth more than those who don't. Parks are more than simple decoration as they provide activities, recreation and a chance to connect. They keep wildlife in the area and become places where people socialize. Birds and squirrels become actors on our real life television that plays a metaphorical movie from eac

Why We Should Support Small Business Saturday

Small Business Saturday came and went just after the Black Friday Holiday shopping spree. Small business Saturday is that one day where shoppers come out in droves to support their local businesses. For good reason small business is seen as the backbone of the American economy with higher growth rates and potential than many large corporations offer.  According to the Small Business Administration small business has contributed to 64% of new jobs and 44% of private payrolls. Small business is a significant contributor to the American economy and supporting small business has a long lasting impact on the overall economy. Small Business Saturday is designed to remind us of that importance and support small business through our purchases. America itself was started and developed from family owned small businesses. It is this entrepreneurial spirit that has helped a great many native and immigrant Americans moving up the social ladder. Even in today’s world small business stil

Black Friday and the Holiday Shopping Season-The Philosopher and the Capitalist

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Black Friday is the day that a mass of Christmas shoppers line the store fronts in search of hard fought treasures. This year Black Friday is being stretched from Thursday evening till the end of business on Saturday. Crowds are not so heavy, consumers not so excited, and sales over the entire season will be a better determinant of retail success. Whether you are standing in line or buying over the net consider what Black Friday means to you. Changes in days are not the only differences you will notice this year. The crowds are a little thinner and there have been a few more protests over excessive consumerism. People simply are not buying everything they can this year and are instead focusing on those big ticket items that save them money; assuming that buying these items are necessary. Many others are skipping the crazy shopping madness and instead searching for their products online. The problem with Black Friday is not the deals or even the interest. The problem lies in how p

3Q Economy Picks Up Speed-Offering New Economic Investment Opportunities

Gross Domestic Product (GDP) in the third quarter (3Q) of 2014 grew to an abundant  3.9%. It is always nice to see the economy grow, unemployment decline, housing recover, and consumer spending rise. What is the icing on the cake is the increased business investment that can tell us a lot about how big money is viewing the economy and its prospects. The reemergence of the American economy offers some new opportunities that were not possible in the past. The global economy may be slowing, China and Europe are propping up their systems, but the U.S. has for a short time been clear from such programs. The slowing world economy should have investors worried but it hasn't. The sour international market may just provide investors a silver lining in the U.S. The U.S. is not isolated from the global economy and certainly will have some challenges. However, as manufacturing parity improves and infrastructure strengthens the U.S. is in a better position to help investors take their capit

China Stimulates Economy to Keep Deflation at Bay

Experts predicted the Chinese economy to slow down for the last five years but it never happened-until now. Instead, the economy continued to grow and develop moving from copying technology to inventing some of their own. As the world’s No. 2 economy it has recently recognized that significant slowing in Asia and Europe may be hampering its own growth and it is taking precautionary measures to prop up its position.  In an attempt to support development and investment it slashed interest rates at the time when American’s have weaned themselves off easy money policies. By injecting credit into their financial system they hope that their banks will lend more money and encourage higher levels of investment. The interest rate on the one-year loan has been reduced to 5.6% while the rate of pay on a one-year savings rate is now 2.75%.  A low interest and saving rate combination incentivizes borrowing money for growth while discouraging the hoarding of cash by more profitable busi