why does it matter how the economy is doing
As the video above explains, when GDP goes up, the economy is generally thought to be doing well. Meanwhile, weak growth signals that the economy is doing poorly. If GDP falls from one quarter to the next then growth is negative. This often brings with it falling incomes, lower consumption and job cuts. The economy is in
recession when it has two consecutive quarters (i. e. six months) of negative growth. Following the global financial crisis that ignited in 2007, UK GDP fell by 6%. This marked the deepest recession for 80 years. As this discusses, the impact on peopleБs lives was severe with large falls in wages, restricted access to credit and many people losing their jobs. Everyone seems confounded as to whether the U. S. economy is improving, with expertsБ opposing views, cherry-picked data points and political gamesmanship causing the political winds to swirl and making it tough to chart our course.
Arguments over the domestic economyБs health have taken center stage in the ongoing Federal Reserve rate-hike watch, but the fundamental issues at hand have far broader implications. Not only is the U. S. one apparent bright spot in a turbulent global economic landscape, but most Americans are not prepared to ride out another significant recession. ItБs therefore imperative that we take a closer look at the health of the U. S. economy, considering opinions on both sides of the issue in order to ultimately reach a reasoned, unbiased outlook.
In pursuit of this objective, we posed a simple question Б Бis the U. S. economy healthy? Б Б to a panel of leading academics. You can find their responses Б five yeses and three noes Б below. "The U. S. economy looks and is relatively healthy, with low unemployment, low inflation and no immediate prospect of a sudden plunge into a sharp recession. " "The U. S. economy is basically healthy. Its growth rate has declined from 3. 5% in the period 1950-2000, to 2% in the period 2000-present. All other industrialized nations have experienced similar declines in their own growth rates. " "The U. S. has one of the best growth rates among the developed countries. " "The U. S. economy is not dead, but it's not about to run a triathlon any time soon. " "The U. S. economy remains in a long-term structural decline driven by bad trade deals, the offshoring of American factories and chronic trade deficits. " "We are still experiencing sluggish growth.
Record low interest rates have helped to bring back both the housing market and the stock market, yet inflation is still below the FedБs target rate of 2% and wage growth is slow despite an improved employment picture. " Image: bCracker / iStock. Disclaimer: Editorial and user-generated content is not provided or commissioned by financial institutions. Opinions expressed here are the authorБs alone and have not been approved or otherwise endorsed by any financial institution, including those that are WalletHub advertising partners.
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