Discuss An employment report………………….
This report outlines students’ perspective of the current trends in economic growth and employment in the US. It analyses the progress that have been made in achieving the main goals of the jobs council. We believe that our contribution will help in achieving goals. There has been a slight improvement in economic and employment growth in the US for the past three years which can be attributed to the government interventions during the global recession of 2007-2009. However, the measures taken cannot achieve long term economic growth hence the need to devise a more appropriate political macroeconomic policies.
Economic condition of the country
United States of America economy has made a slight economic recovery from the recession that was witnessed in the past three years which affected most countries. The economy is projected to grow at 2.6% this year, though below global economic growth of 4.8%, is a positive step towards economic recovery. Past three years experienced a record increase in unemployment in the country which was occasioned by economic recession that resulted into a GDP or recessionary gap.
Government responded positively by using relevant fiscal and monetary macroeconomic policies such expansionary monetary policies to reduce unemployment and restore economy back to recovery path. Fiscal policies employed include reducing taxation rates and increasing government spending to increase aggregate demand, (Perry et al, 200). This has not been very successful as expected but brought a slight relief to the economy. The use of fiscal and monetary policies needs to be revised because they are not sustainable in the long run. The use of theses policies beyond full employment will result in numerous side effects such inflationary pressures, destabilized currency and increased rates of interest as well as poor balance of payments, (Perry et al, 200).
In financial markets, American banks are in better shape than they were three years back, they have high liquidity buffers and can offer credit facilities at affordable rate of interest unlike was the case in 2008 during global financial crisis, this has support efforts for economic recovery and job creation. However, the equity market is volatile and appropriate measures should be taken stabilize the equity market and build investor confidence. This calls for continued government bailouts, (China daily, 2012) through provision of emergency credit facility to crucial players in the economy that are still threatened by bankruptcy to avoid fire sale and stabilize security markets across the financial system, (Dudley, 2011).
The success of American companies or businesses in the global market is at a great risk. Current macroeconomic policies are eroding the competitive of American businesses in numerous ways, hence there is a need to revise the current policies. For business to be competitive they should produce at low cost, therefore macroeconomic policies must be geared towards reducing production cost and increasing productivity. Productivity is achieved through improving human capital through investment in education, increasing physical capital through investing in physical infrastructures and technology and increasing production efficiency through research and development, effective market regulations and providing incentives to private sector. However, the current macroeconomic policies addressing health care issues and other entitlements do not enhance business competitive, (Harvard business review, 2012).
According to United States Department of labor (2012) statistics, non farm employment rose by 120, 000 in march, however, unemployment rate changed by a small margin and stands at 8.2 percent as at march 2012. Increase in employment was recorded in manufacturing, food industry, health care and drinking places but declined in retail trade. Unemployed people stand at 12.7 percent and unemployment rate stands at 8.2 percent, having declined from 9.5 percent in 2009, though still significantly high. This is a major problem especially among the youths and need to be addressed, (New York Times, 2012).
We recommend for the revision of current macroeconomic policies which address health care issues, and instead employ macroeconomic policies that will enhance productivity, and lower per output cost of production without compromising the standard of living of people. Government should invest heavily in education to increase human capital which will help increase productivity hence making the economy competitive.
Government should increase its spending in infrastructure and technological developments as well as increasing physical capitals which are necessary for the business operations. Funding in research and development, effective regulation of markets and provision of incentives to private sector are highly recommended because they will lead to the efficient use of human and physical capital resulting into production efficiency and this will increase competitive of the economy leading to economic growth and employment creation. However, investment in health care cannot salvage the nation from its poor economic situation.
We recommend for the removal of international double taxation applied to US multi-nationals. This is because; these types of taxation policies have forced these MNCs to relocate their businesses outside the country leading to loss of employment. Taxation policy should be favorable to both the government and businesses. Government deficit should be funded by foreign borrowing to avoid competition for domestic funds which pushes up the cost of credit to be invested in the private sector capital stock.
Dudley. F. (2011): U.S. Economic Performance ‘Mixed,’ Banks in Better Shape. Retrieved from http://www.bloomberg.com
China daily, (2012): Depening US financial crisis; Retrieved from http://hbr.org.
2nd May, 2012.
Harvard business review. (2012): Macroeconomic policies and US competitive. Retrieved from http://hbr.org: magazine, march 2012.
New York Times. (2012): U.S. Commerce Department; Jobless claims rise as trade GAP shrinks. Retrieved from http://topics.nytimes.com
Peery. J; Walter, E; Hueng, C. J (2009). Using the Aggregate Demand-Aggregate Supply Model to Identify Structural Demand-Side and Supply-Side Shocks Journal of Money, Credit & Banking (Ohio State University Press), Apr 2006, Vol. 38 Issue 3, p777-790, 14p
United States Department of labor (2012): Issues in labor statistics, March, 2012 labor review report. retrieved from http://bls.gov.
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