Essay on Current Economic Events
The growth of the employment rate and car sales discussed in the Newsweek’s article “Jobs and Car Sales Expected to Show US Economy Rebounding” may be perceived as a positive trend in the US economy but the situation is not as good as it may seem to be because the spending has grown just by 0.2%. Therefore, the optimistic forecast of the US economic growth driven by the growth of the employment rate and rise of the car manufacturing industry, which is one of the mainstream industries of the US, can fail to bring positive effects on the US economy, if the spending remains at the low level, as it is at the moment. In other words, the growth of the US economy cannot be stable, unless the consumption increases that means the growth of spending. The growth of spending is a very important indicator that proves that the economy has started to recover and starts growing.
At the same time, some researchers () stand on the ground that the growth of spending is an essential condition of the development of the economic growth in the course of the recovery of the economy after the economic recession. At this point, it is worth mentioning the fact that the increase of spending is essential for the economic growth because the US economy is oriented on the consumption. The increase of spending stimulates the increase of business activities to meet the existing demand in the market.
At this point, it is possible to refer to the traditional view on the supply and demand economy because the development of economy relies heavily on business activities, which in their turn, relies on the development of the supply and demand balance in the market. The high demand in the market stimulates the production of goods and services and business activities. The rise of business activities creates new jobs. At this point, it is possible to refer to the article “Jobs and Car Sales Expected to Show US Economy Rebounding”, which shows that the growth of jobs and car manufacturing may be an indicator of the possible growth of the production and, therefore, the growth of the employment rate.
However, the article also shows another aspect of the economic development – spending. At this point, it is possible to place emphasis on the fact that the economic development cannot progress, if the spending is stumbling (). On the other hand, proponents of the Keynesian theory point out that the economic development requires the government regulation of key macroeconomic factors, including unemployment, inflation and GDP growth. In such a situation, the economic growth in the US can occur due to the employment growth, regulation of inflation and the growth of GDP. In such a context, the growth of the employment rate along with the growth of the production in the US. Nevertheless, the increase of the production and employment rate still do not lead to the increase of the economic growth. In fact, the increase of employment and production does not lead to the effective regulation of the inflation, which depends on spending.
Thus, the recent growth of the employment rate in the US to the pre-recession peak and the growth of the car production cannot maintain the stable economic growth in the US, unless the US increases spending.
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