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It is very possible that there could be a switch from U.S. Currency to the stronger Euro. It is causing tension overseas by creating long-term structural problems. If Europe doesn’t see the change than it may force down the wages and hurt employment. Also people trying to import and export goods are facing losses when dealing with the currency exchange. Manuel Rodriguez Bordillo, director general of Spain’s Agrosevilla, one of the world’s largest olive exporters claims that “There’s no way this can continue; we’re losing 15 percent [in revenue] this year just because of the exchange rate.” One major reason for crossing over to Euros as a whole. Although it seems that it should work, the current U.S. deficit weakens the U.S. dollar. In theory, when the U.S. dollar is weak, as it is now, U.S. companies benefit because U.S. goods should appear cheaper to overseas consumers and U.S. companies should get a boost converting foreign sales back into dollars. But according to a currency expert at Brown Bros. Harriman. “Just because there’s a weak dollar and you buy (stock in U.S.) multinationals, it might not work out,” he says. “There’s no shortcut to investing.” Point being the weak dollar does not benefit the U.S. economy.
My interpretation of today’s economy has somewhat improved over the past year. Granted, the job market is still in the gutter but “economically” the states have improved capacity. The nation’s wealth and markets have shown some improvements. The stock market is showing a steady climb and residential areas are appraised at higher values. As a business school graduate, I’ve been on the job hunt. I’ve applied to numerous companies (big and small) and gone on several interviews. The bigger companies like State Street Bank, JP Morgan Chase, US Bank, Liberty Mutual etc. have either been on a hiring freeze or downsizing. The job market certainly hasn’t come around just yet. My family, too, is feeling the wrath of this fallen economy. My father, an architect, hasn’t been able to find work nor have adequate funding from banks to start new jobs. My sister, a mortgage consultant, has had increasing difficulty closing loans and qualifying candidates. All in all, this economy is STARTING to see a turn around, but the majority of the state’s inhabitant are still greatly affected and hurting from the weakened economy. Hopefully it’ll turn around soon.
My family and I feel that the Commonwealth of Massachusetts’ economic state isn’t at its complete worst, and if anything will more than likely improve in the foreseeable future. A good indicator of economic growth or the lack of it is by analyzing the unemployment rate. In Massachusetts, the percentage has dropped slightly in a month’s time, going from 9.3% in September 2009, to 8.4% in October. These percentages still need to come down significantly for strong economic growth, and in comparison September 2009’s 9.3% was the highest rate of unemployment in the state since January 1992 at 9.7%, according to the United States Bureau of Labor Statistics. While being smart about my personal credit, and reflecting on the state of the economy in general, several people I know and myself will be spending quite less than normal this Christmas.
What can the GDP tell us about the economy? GDP is an educator of the world and it’s aggregate measures of total economic production for the country. GDP represents market value of all good and services produced by an economy, during the period measured. Including personal consumption, government purchases, private inventories, paid on construction costs and the foreign trade balance. Exports are added and Imports are subtracted. The GDP is extremely comprehensive and detailed. GDP incorporates retail sales, personal consumption and whole sale inventories and are all used to help calculate gross domestic product. The GDP is considered the broadest indicator of an economic out port and growth. Real GDP takes into account, allowing for comparisons against other historical time periods. The bureau of economic analysis issues its own analysis document with each GDP release, which is a great tool for analyzing figures and trends and reading highlights, of the very lengthy full release. Yet, data is not very timely. It is only released quarterly. Revisions can change historically just a .5 GDP growth is a big change. While quarter to quarter figures can show some volatility long term trends in GDP remains the single most conclusive piece of information on the economy as a whole. This indicator is a must know for investors in all asset classes.
I believe the impact of middle class Americans on the US economy is major and I do not think that people are going to be spending any more money than necessary. “Among the enormous costs of the downturn is the loss of some 5 million payroll jobs over the past 15 months,” said Federal Reserve Chairman Ben Bernanke. The fact that many middle class Americans are losing their jobs does not help the falling economy. Bernanke also states that “Inflation in this type of economic environment is expected to remain low”, which is yet another factor to the economy going backward. Considering this, I do not see the economy moving forward anytime soon, at least not until Americans are given the opportunity of employment
My family and I don’t discuss the economy that much, but it does often reflect by what we say when we do have certain discussions about what is going on in the world today. For example, I watch the stocks and occasionally, I notice the differences between how companies are perfoming in certain quarters up to now. I know that the Google stock price is now in the high $500s. It is right now, $579.76. That was an increase from $262.58. Federal Express has a stock price of $82.65, and over the course of a year’s time, the yield has been increasing and decreasing since March, but it is a steady growth. I think that since March, the economy is making a progressive rebuild. I don’t see any type of inflation going to happen anytime soon even though consumers are changing their spending habits, it’s not impacting the market significantly to cause another recession from what I’m seeing on the charts.
I think that GDP can tell us some useful information about the economy, but that it should not be used as the sole factor in determining how well the economy is or is not doing. In 1991, the Bureau of Economic Analysis switched from gross national product to gross domestic product to reflect a changed economic reality, but it excludes many important factors. According to a September 22 article in The New York Times, economists Joseph Stiglitz and Amartya Sen say that focusing only on the GDP fails to factor in on the social costs. They report that “Instead of centering assessments on the goods and services an economy produces, policy makers would do better to focus on the material well-being of typical people by measuring income and consumption, along with the availability of health care and education.” These are just some of the reasons why I think that GDP alone does not reflect an accurate picture of our economy and should not be used as the sole factor in determining how well the economy is doing.
There is potential for the Euro to overtake the US Dollar in international market transactions. First of all, since 1999, the US Dollar’s share of the world’s currency reserves have fallen from 70.9% to 64%, during the same period the Euro has increased from 17.9% to 25.8% (economichelp.org). The Dollar lost more than 25 percent of its value against the Euro between 2000 and 2005 (taipeitimes.com). Also, there are a number of middle eastern countries who used to maintain a fixed exchange rate, however, some countries have decided to drop the pegged dollar. The Euro is more politically attractive, too. There are positive outcomes to a failing Dollar however. A decreasing valued dollar will increase the competitiveness of US exports. Increasing demand for cheaper exports, with an elastic price, there will be an increase in value of exports. An increase in export demands can reduce unemployment. So maybe we have to wait it out and see were the Economy takes us. I doubt America would allow the Euro to overtake our The Dollar on the sole fact that we wouldn’t want that reputation. We are a strong country and we have overcome harsh predicaments before.
Even though the US dollar has not been this low in nearly a decade, i do not feel that the euro will replace the dollar in international market transactions over the next decade. According to an article on NPR.com written by Eric Weiner, it states that “A weak dollar can be good for the U.S. economy, because it makes American exports cheaper and, therefore, helps close the trade deficit. When looking at the effects the deficit has had on the US dollar, there are many things that have already been showing for some time. In the same article on NPR.com, “The most obvious effect of a weak U.S. dollar is its impact on American tourists traveling to Europe. In Paris, $7 cups of coffee and $50 taxi rides are suddenly de rigueur. A weak dollar affects even those American consumers who never leave home. If you have a penchant for German cars or French wine, expect to pay more, as European manufacturers raise prices to compensate for the weak dollar.” One of the main reasons monetary authorities are not calling for a strong US dollar policy is because the weak dollars works out well for them. Since there foreign currency is worth more, they have to use less of it here. Eventually, if the dollar stays weak, foreign investors will be less likely to put money in U.S. Treasury securities without much higher interest rates — and that, in turn, can make it more expensive for American consumers to borrow.
My feelings and my families feelings about the Massachusetts economy today differ greatly. My parents, especially my mother take the negative and defeatist approach to whether or not the economy is on the rise or not. They feel the same way as far as the employment situation is headed. I, on the other hand feel differently towards the direction that the economy in Massachusetts is moving. I believe that history gives us a blueprint as to what will eventually take place in the upcoming months and years. History has told us that economy works in cycles, meaning that what goes up must come down. The same can be said for the opposite view, what goes down, ultimately must come up. This pertains not only to consumer spending but also to the employment situation in Massachusetts. More consumer spending will drive the economy up, therefore influencing spikes in the economy, which in turn will create more and more jobs. As to the question of whether or not my family or I will be spending more this holiday season than last season I think my answer is probably the same as most others. Due to the current state of the economy, I will not be spending as much as I did last season. The reason being that I am now a full time student so my financial situation is quite different from last season. I have never had a credit card but I’m sure that if I did that I would probably be making a substantial amount of unneccessary purchases.
After doing some research and talking to people, I found that many people are leaving Mass. The majority of people who moved from Mass last year reported they were very happy with their new lives in their new states and would not move back. A Boston globe has found 73% of those surveyed say they live in homes that are much bigger than here in mass and 54% of people say their standard of living is much higher, the findings underscore the difficulties of living, raising children and raising enough money in mass, and is suggested that these fundaments aspirations of the American middle class are often easier for people to achieve outside the state. Also when polled what people missed the most about mass 25% of these polls said their family. 22% said natural resources, and 8% missed the culture. Ask what they missed least, weather topped the list. Traffic and commuting was named second by 19% and taxes rounded off third by 16%. Also not to be left behind politics. Which people find much less complicated in other states. The results also show New Hampshire was one of the top destinations for people fleeing mass. Florida was the second most popular state. Regionally the south east was the most popular overall. Blue collar non professionals and those who made less than $75,000 a year were more likely to move than others who left the state. Middle class people found they can no longer afford to live in the bay state. People want a suburban lifestyle, a yard, a home. They want the American dream. It seems to hard to find in the good old bay state. As a father of three children, two children almost in college, I will be one of those people thinking about moving once my children are off to college. I too, find mass to be too expensive and overtaxed than other states.
Going forward I don’t see the economy improving for the middle income Americans. According to the Census Bureau the median household income in the United States fell 3.6 percent between 2007 and 2008, from $52,163 to $50,303. The Census Bureau also announced that the nation’s poverty rate increased from 12.5 percent to 13.2 percent with 39.8 million people in poverty. Consumer spending will be greatly impacted with significantly low consumer spending due to the high unemployment rate. According to the Wall Street Journal the United States had a record low of 2.4 million job openings, employers are in no rush to hire back the people they laid off. Therefore I don’t see the economy improving in the near future for the middle income Americans.
Me and my family think that the Massachusettes economy isn’t going as well as what we want it to. The employment situtation is defiently not improving. It is so hard to find a job. Even though work force develpment says “The Executive Office of Labor and Workforce Development reported today that the unemployment rate in Massachusetts dropped from 9.3 percent in September to 8.9 percent in October, the first monthly rate decline since June of 2007. Jobs are down 900 for the month of October,” people are still having trouble finding and holding a job permittedly. This holiday season we are spending a whole lot less on presents this year then on last year’s presents. Money is tight this year since my dads work cut back on over time so he lost about $10,000 in over time money. So me my mom and my brother have to contribute more to help us. This time last year i didnt have credit but since im a student my bank gives us a credit card with a $500 limit to help me get credit and be set when i get older. Hopefully this time next year the economy will alot better and can spend more on presents for my family and friends.
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