https://www.marketwatch.com/story/the-us-economy-still-isnt-firing-on-all-cylinders-heres-what-needs-to-change-2020-01-18
In the past few quarters the U.S economy has been slowing down, while also the consumer side has been the reason that GDP hasn't gone off a cliff. There has been an incredible amount of turmoil due to the trade war, and because of that other factors of GDP have slowed down, most notably investment. The recent trade deals may be helpful with investment but that is unlikely to actually help enough to get the economy "firing on all cylinders". Economists are still hopeful that with time that the economy will get back to what they think it can be at. What do you believe businesses will be doing in the upcoming quarters in terms of investment? And along with that, what do you think will be happening to consumer confidence if investment does increase/decrease?
2 comments:
Since the U.S has to meet its target goals for growth and GDP, I belive businesses will increase the investment aspect in order to boost Aggregate Demand and growth opportunities. Increasing investments will increase business productivity, optimism, and thus consumer confidence in the economy. It will help the U.S overcome the previous months of turmoil due to the trade wars. Since consumers have been the driving factor in the recent economy, it is up to the businesses to increase their investment and take the load off.
Firstly, it is important to note that the reason for economic growth within the past few years is not due to an increase in disposable income, but due to investments in new technology. Companies are able to increase their share holder value with the use of new technology, as incomes are not rising but GDP is. Thus, the current growth is not beneficial to the average consumer as much as it would have been in the past. Businesses will continue to increase investment in technology, but not as much in labor which may potentially have a negative affect.
Additionally, consumer confidence will continue to decrease as growth decreases and people become more aware of the fact that economic growth is not being reflected in their incomes. With artificial intelligence replacing the need for many employees, consumer confidence will decline significantly which will result in a recession.
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