This article is all about how
economists think that economic growth is become weaker. Prices of consumer
goods fell for the first time in four months. As we learned in class, a change
in price causes movement along the demand curve. In this case, quantity
demanded decreases since consumer prices fell. Two more parts of our economy
that decreased over the past few months is production in industries and sales
on houses. All of these occurrences prove that the Fed should continue their
monetary stimulus plan like they’ve said all along to speed up economic growth.
Recall our discussion in class
about the Consumer Price Index. We learned that it is produced by the Bureau of
Labor Statistics and how it is used as a measure of the change in prices of
goods and services over a period of time. The Consumer Price Index recently
fell by 0.2% due to the drop in gas prices last month. In February, the CPI
increased by 0.7%. Although the CPI decreased, consumer prices rose 1.5 percent
over the past year.
A
recent report from the Fed showed that levels of production in factories fell
by 0.1%. This was due to output of metal and electronics declining. The
production of automobiles surprisingly increased. The automobile industry seems
to be doing pretty well lately in our economy. Overall production in industries
rose by 0.4% last month despite weakness in factories. This was due to an
increase in utilities’ output.
It
seems as if we have hit a “speed bump” in economic growth when examining data
from the past two years. Manufacturing, sales in retail, and employment are
three areas that seemed to get weaker last month. Raising taxes and a cut in
government spending could be two explanations for why our economy growth seemed
to slow down a bit.
One possible
way the Fed plans to help stimulate our economy is by buying $600 billion worth
of bonds. This plan is what we call quantitative easing. If this plan goes through,
it will lower interest rates, increase stock prices, and hopefully increase
consumer spending. All of this could create more jobs and speed up economic
growth. Then in return, businesses and individuals’ confidence would
potentially increase, causing the aggregate demand curve to shift to the right.
Reuters.
"Weakening Seen in Economic Growth Data." The New York Times.
The New York Times, 17 Apr. 2013. Web. 18 Apr. 2013.
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