http://www.google.com/hostednews/ap/article/ALeqM5gQ6iVGh2tkgdbkyaZBrqeP-BqpdwD9EUEIE81
Summary
Due to the recession, high unemployment and problems in the housing market is the main economic issue that the United States is facing. The economy seems like it has stabilized and is improving, but many Americans are still unemployed. Not a lot of people are being hired even if the number of people being layoff has decreased. Unemployment is at 9.7 percent. Federal Reserve Chairman Ben Bernanke said he has not seen a recovery in the housing market (foreclosures keeps increasing). Bernanke believes that record-low interest rates should help with the recovery of the economy, but it will not quickly increase the employment rate. He will have to decide when to increase the interest rates and if done too soon, it will disrupt the recovery of the economy. Inflation may occur if he waits too long.
Connection
Chapter 5 focuses on unemployment. It lists the many types of unemployment. Becuase of the recession, demand-deficient unemployment could be a possibility of the recession. Many people are spending less money on goods and services since there was a high rate of unemployment during the recession. Even though the economy seems to be stabilized, many Americans are still without jobs. When the consumers are not spending money on goods and services, then employers will not need as many employees to work because of the lack of demand for the goods and services, which leads to many people being layoff. This also causes sales in several businesses to be reduced.
Reflection
As the country recovers from the recession, businesses may improve and people will be able to find jobs. Then consumers will be able to spend more on goods and services which will increase the level of spending. This will allow an increase in the number of jobs available and the unemployed will be able to find jobs. I agree with the article when it said that Bernanke will need to consider when it would be a good time to increase the rate because if the rates were increased too soon, then those who were unemployed during the recession will not be able to find jobs quickly. If he waited too long to increase the rates, inflation may occur because the demand of the goods and services will increase which causes the prices to increase too. When the economy finally improves, people will be able to find jobs and spend in order to create the need for more workers in businesses.
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Yes that is true; the timing on when to increase the rate does need to be considered before it is changed. But to help recover from the recession nowadays also depends on the other countries and how they’re doing too. For example, right now US are consuming more than it is spending and China will need to rely on domestic demand as their engine of growth. The rotation of global demand will be one of the solutions to the global imbalances of the financial crisis. So Canada can do their best to help benefit everyone else but the other countries also need to help out to have a greater positive impact on recovering from the recession.
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