Showing posts with the label stimulus

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

Are Lower Fuel Prices Acting Like an Economic Stimulant?

Fuel prices are heading downward to the merry of consumers and corporations alike. At the pump are some of the lowest prices we have experienced in over four years. Low fuel prices are not only helpful for families trying to balance their budgets but also businesses that benefit from lower costs of building, manufacturing, and distributing products. Low fuel prices could potentially have a positive influence on economic growth in many of the same ways as a stimulus. Consumer Disposable Income : Fuel is an expense that families must pay in order to get to work, drive their kids to school events, or go to the grocery store. Families may cut back on traveling in lean years but generally rely on their automobiles for daily errands. When fuel prices decline the amount of money families must spend also declines creating greater disposable income for purchasing other products.  Lower Business Costs: It costs companies to truck products from one location to the other. It also c

GDP Improves 4% in Second Quarter

The winter chill has thawed and the economy has rebounded 4% in the second quarter surpassing the governments expectations by 3%. In a spat of heightened economic activity improvement marks a continued trend of increasing economic gain after one of the nation’s worst recessions. The numbers provide some relief for those worried about the previous quarter’s retraction. “ Today’s advance estimate of real GDP is a positive signal that our economy is continuing its steady rebound ,” stated U.S. Secretary of Commerce Penny Pritzker. She also highlighted that it is necessary to continue work to ensure the rebound is long lasting.  The plan is to encourage “ more companies to export, increase foreign direct investment in the United States, strengthen regional manufacturing and economic development hubs, ensure workers have the skills to find jobs businesses need to fill, and unleash more of our data, all of which helps businesses grow and create American jobs .” The numbers a