critique of Josh Sibio's post

In response to Josh’s blog post about technology improving the consumer market. I thought he did a good job explaining the article, and using the information that we learned in class in connection with the blog post. He talked about how the technology has improved the economy, this is since consumers are spending more online shipping companies such as UPS and FedEx are experiencing more business. Also it creates a buyers market and Consumers are more likely to buy on impulse while shopping online. People will have to be specialized in working with advanced technology, which will create higher paying jobs  that requires higher education.

I would totally agree with the fact that consumers  spends more compulsively because when you are shopping online it is a lot easier to convince yourself to buy something. I feel like that are because when you are shopping online the you are not holding actual money instead you have a credit card number. I don’t know how to explain it but for some reason when you are shopping online it is a lot easier to spend money.

He goes on to explain that because Internet shopping has gone up in the last 10 years the GDP has risen as well. When you buy a product online instead of in the store you pay the company for their product and the company pays a shipping company to ship the product to you. So in turn it is not just one exchange of money, it is actually two, which increases the GDP that much more. Also the article explains that with the improvement in technology, product will decrease in cost. Which will improve revenue, thus improving the economy. However he mentions that in the article it said that because of the improving technology companies are able to produce more products and sell to over seas countries, and that international trade is one of our last hopes to get us out of our national debt. I would disagree with this comment because from our notes from class and other articles it clearly takes more than one aspect of the economy to lift us out of debt. It is true that our export are extremely low compared to other countries, but international trade is not the only aspect of our economy.

         In conclusion I felt that josh did a great job with his article he conveyed the information well and used info from class to support his claims. The topic he choose was also interesting because technology is a vital part of our world today and how it affect the economy will continue to change.

         

Critique of "Retail Sales Falling."

I have already posted this critique as a comment in the original article that can be found at:  http://kassensecon122.blogspot.com/2013/04/retail-sales-falling.html

Here is a copy of the critique.

     I think this article does a good job at relating the declining sales to increased taxes, and how that can lead to unhappiness, which in turn leads to people spending less on luxury items. Casey does an excellent job summarizing the main points of the article as well as analyzing the content. The article critique relates the article to our class discussions right away and defines many of the terms used in the article. I think Casey’s analysis is very good and does everything that can be done with the information given, my main critique is both the article and Casey not taking in how online sales effect the decline in the retail sales.
     The topic of failing retail sales is something I’m very familiar with. From 2006-2011 I worked for Best Buy and witnessed firsthand the steady decline of sales year to year. In the early years I worked Best Buy at Valley View Mall in Roanoke, VA did pretty well. We were never the top store in the company but sales were decent and one year (2007 or 2008) we made enough profit as a store to where even the part time employees such as me would receive a bonus each quarter. But online sales had steady been increasing, websites like Amazon and Newegg were the true competitors. From my experience, the appeal of online shopping has been the real killer for retail sales. This was evident when at one point we were price matching Amazon (And other various online stores) if customers requested it. This type of aggressive price matching only lasted a couple months because we ate so much profit doing it, it was actually more economic to let the business walk rather than discount the products to match online competitors. I can’t count how many times I would finish answering a customer’s questions about a camera, television, car speakers, etc. only to “ask for the sale” (Best Buy Lingo…) and receive the reply, “No, I think I’ll buy it on Amazon because it’s cheaper.” It’s hard to argue with that logic, and who can blame someone for trying to save money with how tight money is today.
     It’s pretty well known in the world of retail that a large portion of the people who come in to view a product, is basically just testing it out before they buy it online. Best Buy and most brick and mortar electronic retail stores are rapidly turning into a test drive center for online sellers and it probably won’t be long before giant stores like Best Buy, Circuit City, and hhgregg are all but a memory. Perhaps insight like this is not going to be found in a textbook just yet, but online sales have completely changed the game for retail stores and unless they change their structure very rapidly and effectively, it may already be too late.

Tom Troiano Macro Econ.

http://news.google.com/newspapers?nid=1346&dat=20001011&id=FPEvAAAAIBAJ&sjid=qP0DAAAAIBAJ&pg=3749,169088

As you can see from this newspaper article posted on October 11th 2000, there was a massive frenzy for Sony's Play Station 2. The anticipation for this gaming console was great in late 2000. Parents and teens across the country greatly anticipated the gaming systems release just before the start of the holiday season. This was supposed to be a huge hit and a huge profit for Sony. Because of manufacturing delays Sony did not release all 1.4 million Playstation 2's on time. They only released about 500,000. Now as you can imagine the demand for these PS2's was great because kids were begging parents to get one, and right around the holiday season there was no better present. Sony's delayed production led to a massive increase in demand for buyers. Not only did the demand become so high that people were willing to overpay for a game system that at most cost 200 dollars, but some people ended up paying thousands. People ended up buying these systems and re selling them on Ebay for 5 times the price. Looking at this incident on the Supply and Demand curve would show you that the demand side of the curve was very high, therefore jacking up the price of the product. Also because the price wasn't naturally increased by Sony, the demand curve chart was way up, drastically increasing prices. This situation had a skewed market equilibrium, there was simply not enough supply to meet demand. Furthermore if you look at this items price elasticity, it was basically non existent ( change in demand in % divided by change in price in %). The reason i say that is because even when the Playstation went on Ebay and the price was 3 or 4 times more expensive the demand never changed. This incident was one that really took the supply and demand charts and made no sense of them. Buyers were buying not with there heads, but they were buying on impulse. It seemed like there was no price to high for the Playstation 2 during this frenzy. It will be interesting to see when the next incident like this occurs. Tom Troiano

Rosengren sees more need for Fed stimulus

Wes Pancoast

Dr. Kassens

Macro Econ

April 18, 2013

Article Post

            The article I am posting about is an article from the Boston Globe on March 27, 2013.  The article is about the director of the Boston Fed, Eric S. Rosengren pushing for continuing support from the Fed by way of stimulus.  The article mentions a number of topics covered in class such as monetary policy, inflation, unemployment, full employment, and interest rates.  Rosengren wants to continue to push for more stimulus because it helps accelerate the recovery of the economy.  While the economy is recovering, he believes that it is too slow a rate citing expectations for the unemployment rate to drop only .2 percent from now until the beginning of next year.

            The Fed has been stimulating the economy by purchasing U.S. treasuries and mortgage-backed securities creating low long-term interest rates for the people of the United States.  This encourages consumers to purchase houses and cars to increase consumption and encourages businesses to produce more goods and create jobs because money is cheaper to borrow.  This is an example of monetary policy by the Federal Reserve Bank.  The ultimate goal of these policies is to get the economy back to full employment, which occurs when there is no cyclical unemployment, or insufficient demand for labor.  The Fed has a target unemployment rate of 6.5 percent before they allow interest rates to rise again.

            The counter argument to continuing this stimulation of the economy is a worry that inflation rates may begin to rise to levels that are too high possibly causing another financial crisis like the one we are currently recovering from.  Another is that it could cause housing rates to increase too much because of low mortgage rates.  Rosengren says that this should not be a worry; however, as the inflation rate remains below 2 percent and housing prices are below their peak.

            Monetary policy is a key tool to control the economy because it can be used to increase or decrease the money supply.  This will have a direct effect on production and consumption of goods because people will have more or less disposable income.  For example, times when the Fed may want to lessen the money supply are when inflation rates get too high raising prices.  Lowering the money supply will lessen demand and cause prices to drop.  The Fed may want to increase the money supply, however, when unemployment is high and consumption is low.  This will cause demand to increase, making a need for more production and new jobs.

Woolhouse, Megan. "Rosengren sees more need for Fed stimulus." Boston Globe [Boston] 27 Mar 2013, n. pag. Web. 18 Apr. 2013. <http://www.bostonglobe.com/business/2013/03/27/boston-fed-rosengren-sees-slow-growth-more-need-for-fed-stimulus/vn9IN4CprzYWvzqsKy0qlJ/story.html>.

http://www.bostonglobe.com/business/2013/03/27/boston-fed-rosengren-sees-slow-growth-more-need-for-fed-stimulus/vn9IN4CprzYWvzqsKy0qlJ/story.html

Importance of Preventing Federal Spending Cuts

James Lee

ECON-122

April 18, 2013

http://www.nytimes.com/2013/01/31/business/economy/us-economy-unexpectedly-contracted-in-fourth-quarter.html?_r=0

               This article talks about how important the government is to help the hurt economy by preventing federal spending cuts and allow for the foreign countries to recover. The government has recently been lowering its government funding towards many sectors of the economy, especially the military spending dropping 22.5% in the fourth quarter. The vast government spending is due to the Federal’s Reserve campaign to stimulate growth along with the stimulus package. With significant federal spending cuts in March 1, how will the economy and the people react to this?

                With the recession causing firms, households, and foreign trade to decline, the government stepped in to make up for the slack and go above and beyond.  The federal spending is all part of the aggregate demand equation to stimulate the economy. However, the article states that the economy is shrinking at an annual rate of 0.1 percent in the last 3 months of 2012. This shrinking would show that the aggregate demand shifts inwards where the GDP and price has been reduced. This data would point towards another recession, but the article disagrees.

                As the federal spending decreases, the spending by consumers and business has consistently been strong. Since the GDP is shrinking, the unemployment should increase, but it was observed that it decreased possibly due to the consumer and business heavy spending. The strong business and consumer spending is due to the Federal Reserve’s campaign by giving out near-zero interest loans. This trend follows the determinate of investments where lower interest rates cause more demand for investments. Other developed countries have cut down on spending that caused weak foreign trade and affecting the shrinking of the economy. Even if other countries show their economy slowing down, the US private sector has been doing well.

                There has been 15.3% jump in residential investments, and investment in equipment and software increased 12.4%. However, the negatives outweighed the positives and caused this shrink. Also the shrink is partially due to only the big companies that make up the index like DOW, NASDAQ, and etc. struggling more than most of the private sector.

                The current aggregate demand affecting the economy is only causing shrinkage by only a percent, but to make federal spending cuts to an economy slowly recovering isn’t the wisest decision. The current world economy is very fragile where the slightest mishap like allowing banks to buy bonds with no committee to regulate them and when the housing market crashes, the whole world is negatively affected in some way or another. The federal spending should stay as is and allow other developed nations to recover and increase US foreign trade to boost the economy. Then the government can start cutting on spending, while the economy continually recovers.

Josh Sibio
Econ- Macro
April 18
http://technologyaffectstheeconomy.blogspot.com

                  It is often thought that the economy has a mine of its own and it just follows the natural order of supply and demand.  This article explains the role of technology in our economy, and how it can almost be directly linked to the rise and falls of the economy.  The article give examples and explains how our technology is closely connected to our nations wealth, standard of living, employment, and communication.
                 First, the article talks about how technology has changed the market place.  Its almost a no brainer to see how technology has revolutionized the way we look at goods.  Now-a-days the majority of us use the internet, and statistically in America the average amount of retail sold form online purchases is at six percent and scheduled at this rate to be twenty percent in ten years.  Being able to use the internet gives the buyer a better ability to make sure what they are buy is what they actually want and giving them the tools to research for the best good for them.  According to this article "a happy consumer quals a happy economy."  Also, the internet creates an environment for the buyer to buy on impulse. Which we know we all have done, but the more people buying puts more money into the economy which also is a benefit.    
             Second, the the article explains how technology makes our economy better buy increasing more production and in turn increases GDP.  The continuos advancements in technology has made creating products more efficient.  Meaning less money spent and more products made.  Having more products made drives the prices down and can mean more people spending money.  Being able to create many more products opens the door to international trade.  Being able to produce enough for both Home and over seas has increased our national trade more than ever, which many believe is our best hope to help our national debt.    
             Lastly, with more technology being used, the more specialized one has to be able to operate it.  With many types of machinery requiring more specialized types of talents  which causes the operator to have more education.  Companies are having to pay higher salaries for these people with higher education to make sure that they get the  employee that they want.  In a way more technology equals higher salaries and higher increase in pay contributes to the nation's increase of wealth.    

GDP and Unemployment

 

GDP and Unemployment
Thursday, April 18, 2013.

 

This cartoon explains a lot of what the last part of our macroeconomic class has been about; how people are not necessarily just unemployed but those who are employed are often under-employed for what they are qualified to do. This touches on the concept of economics as a whole as it takes a look at the unemployment rate and the reason for unemployment and how it can be explained. This also says something about our economy as a whole because with the people who are more qualified taking the jobs that require less qualification that is leaving fewer jobs available for those who do not have the qualifications even for only that job.

                There are many reasons for unemployment. One thing to keep in mind is that as the gross domestic product (GDP) goes up that unemployment goes down, however there is generally about a six month lag. The GDP is affected by many things; some of the main things that affect it include: the government expenditures and taxes as well as consumption, exports and imports. In essence this means that unemployment is much more complicated than people being lazy and not getting jobs. GDP is also affected by the prices and quantities of items that are produced which is generally much easier for people to see how that would be related. Consumption is the largest factor on GDP and therefore unemployment. 

                GDP is the output of the economy. The output it produced by the labor force. To find the unemployment rate you divide the number of unemployed, which by definition means that they do not have a job but are actively seeking one, and divide this by the labor force, which consists of the unemployed and the employed. There are also people who are unemployed but are not included in the unemployment rate because they are no longer looking for a job for some reason. Another thing to keep in mind when thinking about employment though it is not taken into consideration is that there are people who are part-time employed for economic reasons and those reasons can vary person to person.

                In all this cartoon shows how unemployment and employment can be different things for different people, just because someone is employed doesn’t mean it is what they are capable of and the same for someone who is unemployed it is not necessarily their fault. This cartoon also illustrates how the economy’s state can have a big effect on everyone because by the person with the better education having to take the job that is below what they are capable of doing that is leaving those jobs unavailable to those who cannot do things that require more education.

http://www.econosseur.com/economic-jokes.html

Amber Cook