Macroeconomics News Analysis - Example

Macroeconomics news analysis Name: Institution: Date: Macroeconomics news analysis Introduction Macroeconomics category of economics which deals with the total or rather the whole part of the economy. The economy can be measured in terms of capital, labor and the interactions. So macroeconomics deal with these issues. Macroeconomics can also be seen in terms of inflation, unemployment and the exchange rates. For example in the articles the writer talks of unemployment and recession in US. When the writer talks of “in the US, GDP is falling, jobs have decline….unemployment rate is rising…” this statement alone tell you that the writer is actually talking about macroeconomics. Terms and concepts Stimulus in economics refers to a situation in which the government changes the policies of spending and taxation for them to recover the downturn of the economy. In this case the government tries to increase wagesi as well as provide jobs for the citizen and jumpstart the already failed economy. Economy is the system whereby the country tries to create wealth either by creating employment, increasing revenues as well increasing business sales. This can be done by changing the policies in which the money is being spent and also the taxation modes. By doing so there is hope that the economy will be revived in the Recession state. GDP it stands for Gross Domestic Product, it refers to the total market value of all goods and services which are produced in a country in a given year, and this also equals to all government spending, investments and at times includes exports as well as subtracting the imports. Recession is where there is a downfall in the economy due to large spending that is a lot of expenditures and little revenues. Recession can also be brought by unemployment and little wages. Tax is the money that is charged by the government or rather the state on goods, services, property or the investments. It may also be deducted whenever there is a transaction or on the income of the individuals Demand is where there is a desire for certain for good or the services. It can also be the claim that may be needed within a specified period usually very short time. Investment is the purchase of items; it can either be physical goods with the expectation of getting profit. So we can say that investment involves the use of money with the expectation of getting more money or can also in terms of improving business. Depression is the downfall in economy that can last for several years. From the article it can be seen that there was an economic depression in US some time which lasted for about ten years. Wages are the payments which are made to the worker especially when somebody is working on hourly, daily or weekly basis. According to the articles wage here is seen as that share that represent the whole product which is paid for the total contribution on labor. Analysis of the macroeconomics in US The economy of US seems to be deteriorating in some way. The writer is trying to bring to our attention some of the cause of present downfall of the economy. The critical part is when she criticizes the move by the government to great jobs without considering other factors. The writer illustrate this by bring in the unrealistic housing plan in 2008 and she terming this as no-brainer. The writer also in just not discussing the crisis in US alone but the she trying to explain to us that there are other countries which has the same problem of recession also. But with the crisis in one of G-20 seem to worry these 20 countries. The writer illustrate these when there was crisis in Greek and the notification went round in these 20 countries but nevertheless only few have enacted what was agreed then to cut spending. As it can be seen the macroeconomics comes in when the writer discusses about the job crisis. The workers in US are now loosing job and this translates to also decline in unemployment. The GDP of US has seen been declining. According to the articles writer seem not be clear on the issue of the employment and the GDP. In US there is recovery and the writer is not very clear if this recovery is on the right track or no improvement. This recovery according to the writer seems to have no implication on the macroeconomics of the country. There is also a suggestion that the program should actually be created so has to help create jobs for the citizens. The political rivalry between Democrats and the Republicans seem to hinder this prosperity. The writer tend to suggest that people who can do this are the people in private sector but is going further and clarify that not only people in private sector will managed this. The inclusion of other stakeholders will be relevant. The main stakeholder in this context is the government which on the other hand is suggesting that the people who should actually create jobs are the private sectors. The issue of tax comes in, cutting of taxes will not in any way create jobs, the practical example is the previous governments which tried to cut taxes but it didn’t solve the problem of the job creation and the unemployment. With a lot of profit being gained by the businesses the issue of investment seems not to come in as the taxes is the problem. Arguably the writer is trying to explain the deficit that is there is not actually due to the a lot of spending but the government but rather because of the unemployment and people losing jobs hence there will be decrease in revenues. The government should try to come up with different version of curbing deficit and as well as the mode of creating employment and hence they will solve the problem of deficit because the collection of revenue will consequently increase. Apart from the government not realizing that they are losing revenues they also not aware that there is also loss of sales by the business community and also it have the effect on revenue collection. The writer further is not clear on which way the government should actually take, whether to spend or not. But she brings in issue of how the spending should be carefully addressed. As stated earlier stimulus is where the government tries to revive the economy from recession by setting up standard of taxation and spending. The writer suggests that stimulus cannot work giving example of economic depression of 1930, comparing it with what Obama tried to do suggests the stimulus rarely works out bearing in mind that Obama spread amongst millions in several years. We can also see that during World War there was boom and we can see that the government could use spending regularly. During that time the government could create a lot of jobs and hence increase in wages and therefore the public could spend a lot and this leads to more sale and more revenues. The writer to certain extend doesn’t support this but rather gives instances where such a theory can work. Furthermore the writer explains how the stimulus will pierce the holes on the people she says”…..from the stimulus package are likely to pay down debt as they are to increase spending….” The comparison of various instances when the economies were at stake will bring a clear picture on how the economy will be revived using various ways. During war the government spends a lot of time trying to see how to save the economies of their countries. By doing so United States and other Western countries took the measure increasing wages and creating job to avoid recession. The recession was as a result of government short term policies. As it has been explained by the article that Obama stimulus program didn’t succeed because actually of the perception that what then will not work now. The writer is of the opinion that the financial crisis is due to the point which was explained earlier about the issue of wages and the demand. The writer on the other is also trying to provide solutions of the likely problems. She is trying to bring the comparison between the current economic crisis and the post war crisis. In the US there was introduction of wages as per the hour and it was doubled during this time of downturn. In the process of providing solutions, the writer states incoming of corporate sector. The corporate sectors help to bring back the economy by increasing wages and make profits. There was also introduction of the amount wages should earn as well as introduction of unemployment insurance. The interest rate was also reduced and this helps to minimize inflation, also there was the issue of export where there was free market for the exports. This enhanced the making of the profit and the creation of employment in US. The economic recovery went further to the financial sector. The consumers could borrow and this brought the economy almost to hope. The consumers on the other side would want to see the effects of the economic recovery and this means the consumer expect the housing bubble to balance and pay for the imported products. The writer is also try to illustrate that even after all these measures, there was other factors which should be considered for example demand, spending, she says that”….suppressing wages, suppressing demand and balancing consumer spending on debt rather than wages destabilizes the US economy and the global economy”. This shows that without the above factors being considered the US economy can go back to its times of recession and depression hence deficit. The objective of this article seems to put the government of US on notice so that they can save their economy. The write illustrate and emphasizes the issue of jobs and employment. She seem to address the government on the issue of unemployment and rise the wages, the writer say that this can be done by imposing labor right and employment regulation. There is also the issue of taxes which the writer this is the good way of increasing revenue by the government. There is also the taking care of the industries by formulating well laid down policies. In conclusion, the writer suggests that government should know that what fail most economies is the debts and the deficit and this can be curbed by increasing wages and demand. Reference: Beechey, V. &Perkins, T. US Economy, Minneapolis: University of Minnesota Press (2007). Read More