is discussion fourm on class
just I need 2-3 line
I add attacg for statistic to know the idea but I needt to comment on their comment
Statistical Analysis Statistical Analysis U.S. Economy Per capita GDP and GNP Another source Consumption and Household net worth (per capita) Ratio of household liabilities to GDP: If you believe that excessive household debt was the main problem, then the economy is on the mend Productivity and Compensation CBO assessment with and without the American Recovery and Reinvestment Act (ARRA) – i.e. the “stimulus” Bailout of the Automobile Industry The difference: more austerity in the U.K. No inflation here! Theory: Liquidity trap: there is not enough demand (S > I) when the real interest rate is zero S I r 0 S, I Due to the lack of demand, printing money (Quantitative Easing) has not been inflationary The graph shows that the “natural” real rate of interest (r) consistent with full employment is negative. Since r = i – π and the nominal interest rate cannot be negative, the only way for r to be negative is for expected inflation, π, to rise. QE3 has been designed to increase expectations of inflation to reduce r. Natural real rate of interest U.S.: Swing of private sector into financial surplus necessitated large public deficits to avoid a deeper slump The Job Market The Job Market Employment barely keeps up with population Employment Population Ratio A plunge and a stabilization at a depressed level, which has now gone on for almost three years. Everything else is just noise. August 2012 employment report: 96k gain Monthly average gain of 139,000 this year Private Employment in two administrations Public employment in two administrations Note: the spike in 2010 is the census! Government employment shrank under Obama: If government employment had grown as fast under Obama as it did under Bush, we’d have a million and a half more people employed today! Government employment divided by population: Government employment (think school teachers) does not even keep up with population! The top line is total government employment (federal, state and local) divided by population. The bottom line is federal government employment divided by population Government Expenditures Public Investment as measured by the sum of state, local, and federal nondefense investment: US: Actual government purchases (excluding safety net spending) have been uniquely weak, largely because of budget distress at the state and local level Reagan versus Obama Who are the biggest spenders? The 2012 US election: the role of the economy Elections are decided by swing states (like Ohio) and are largely determined by economic factors; if this is the case, Obama has not lost! If the economy appears to be improving, the incumbent tends to do well even if in absolute terms it’s still pretty bad. Is the stock market telling us something? Real private nonresidential Investment is picking up: business is investing again However, residential investment is lagging behind, although the latest statistics seem to indicate some improvement. This should lead to higher consumer confidence and overall demand allowing the economy to pick up (assuming no international shocks) Note: the yellow dote marks when Obama took office The Fed QE3, whereby the Fed is buying mortgage backed securities should help further Comment my classmate H: Besides housing problem, i think the other one is the structure of national economy. as far as i learnt, there have been ten times recessions happened in the U.S. since the end of The Second World War. Among them, only the stagflation and this Subprime mortgage made the U.S. recover so slow. I personally think that the structure of the American economy has to be changed so that the U.S. can recover from the recession. In the stagflation, the U.S. government change the State capitalism. they decrease the tax and Macro-control to the market. nowadays, most of american people need to change their debt structure and their consumption condition. So it takes time to make people get used to the new economy. on the other hand, like the recession in 2001. the reason is that some people overestimated the IT industry. this is just about a single industry and some american people. so the U.S. economy can recover more quickly than this time. Comment my Prof: The stagflation of the 1970s was largely due to the increase in the price of oil. ONce the price of oil fell, the economy recovered fairly quickly (with the help of an expansionary fiscal policy). The recession of 2008 2009 is called the Great Recession and it is the most severe since the Great Depression of the 1929. How would changing the "structure of the American Economy" today cause the economy to recover faster? Today we have what we call a balance sheet recession. I have posted a paper by Richard Koo in the Documents that explain what a balance sheet recession is. There is also a video if you do not have time to read the whole paper.