"Abby Joseph Cohen, the Goldman Sachs strategist, told a conference sponsored by George Washington University this week that lessened market volatility was one of the reassuring signs she saw", and it this research is backed up by data from an outplacement firm called Challenger, Gray, and Christmas, who reported that only 42,900 firings were announced in February, "the lowest for any month since 2006". Essentially this shows that the American economy is recovering, even though there were still thousands of job losses. This means that soon companies should be hiring again, because the Labor Department reported that "manufacturing employment rose in both January and February, the first back to back increases since 2006", which is in part due to the recent gains by companies like GM and Ford and other manufacturing companies, because their demand for goods and services has gone up.
Michael Shaoul, of Oscar Gruss and Son, a brokerage and money management firm, thinks that "It really is just a matter of time before employers elect to address the fact that their depleted work forces are insufficient to deal with robust and growing order books". Furthermore, the Labor Department also released a report that the employment rate, although still around 9.7%, is improving because of a slowing of firings. Furthermore, the S&P reported that only 11% of companies reported not having raised dividends, after last March during the height of the losses, 82% of companies reported losses.
Although this news is encouraging, some economists fear a "double dip" recession, where as others think that because companies cut so many jobs in the past couple years, this will result in a strong recovery with all of the new hirings that are bound to happen. This news is encouraging, however the road to recovery is still long because of unemployment, stimulus dollars still being put into the economy, and job losses, even though the latter is the lowest for a month since 2006.
Do you think the economy will double dip into recession again, or be resurgent because of new hirings and increase in demand for companies? Do you think the stimulus is working upon hearing these reports? What do you think accounts for the slowing in firings, and increase in demand for many companies?
I think the economy will remain on the upturn because of the new hirings and increase in demand for companies. It's the law of supply and demand. With an increase in demand supply will increase and this has to be produced which is keeping jobs steady and even creating more jobs. The stimulus is working upon these reports because it's what the stimulus was formed to do. A
ReplyDeleteThe improving economy is "due to" the rise of GDP? I'm not sure. GDP ≠ the state of the economy. I think a high GDP is still a weak GDP if it's being held up by government spending. The other components of GDP are equally as important.
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I think the economy is likely to resurge because of new hirings and increase in demand for companies. Somebody must be doing something right because the economy is moving back to normalcy or to term Mankiw the equilibrium point. But I think time will tell and is the only matter of fact. The U.S is still in a financial deficit that needs to be taken care of. Yet the good news of the economy offers a sense of hope. A
ReplyDeleteLike Alex, I would not rely on the GDP for a real indicator of a return to economic prosperity. Considering that the GDP has gone up and up while the real income of the average American stagnated, it is a very dubious statistic for grading the health of the overall economy.
ReplyDeleteI'd also disagree with bland news being necessarily good news. The clichéd curse of "May you live in interesting times" does not really acknowledge that life can be just as bad when people find themselves stuck in poor circumstances, where the status quo shows no sign of weakness. After taking advantage of the initial panic of the crisis and saving themselves, the big banks and financial institutions have suddenly started urging fiscal responsibility; no need to help out the little guy. So we've returned to the bland status quo, where the average person is worse off than before but cannot yet convince others (or even themselves) that the status quo is wrong.
GDP is not an indicator of economic welfare. As more people believe the economy is finally taking a turn for the better, it seems that mentality is spreading. As I hear more opinions about how the economy is changing, I wonder if the process is parallel to the saying "fake it till you make it." I think it's partly psychological. I think when the general mindset changes, we will see some changes in the economy. T
ReplyDeleteHopefully we don't expeience a double dip recession. But I think that if this recession has taught us anything it is that the economuy has a mind of its own and economists aren't always very good at predicted what it will do. I think the only thing to do is just wait and see what happens.
ReplyDeleteI agree that the overall mentality of our country will evenutally effect our economic prosperity. This is the case where we will have the ability to speak to our fortune and make it happen because we will it to happen. Our economy is definitely making a turn for the better. I am looking forward to our economy being strong again.
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