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МЕНЮ
| The US Economy after September 11th. Decline or Rapid Growth? (Экономика США после 11-ого сентября. Снижение или Быстрый Рост?)The US Economy after September 11th. Decline or Rapid Growth? (Экономика США после 11-ого сентября. Снижение или Быстрый Рост?)The US Economy after September 11th. Decline or Rapid Growth? Katya Banina, group #110. On a common Tuesday, September 11th music on my favourite radio station
was interrupted by a special news block, which reported that an airplane
tore into the one of the twin-towers of the World Trade Centre in New York. But business and economic spheres can’t afford hesitation and delay. On
this day ruined not only the walls of the World Trade Centre, but also,
which is much more important for the economy, the assumption of the USA
being a standard of stability, trust and prosperity. Businessmen, investors
and brokers recognised that the faster they reacted, the more they benefit Already since the beginning of the year 2001 economists have been
arguing about whether the economy of the United States was declining or
not. The situation, indeed, was not very obvious because of a number of
attempts of the Federal Reserve to stimulate the expansion by cutting the
interest rate. Today, however, practically all of the specialists say that
the American economy is in recession. Now there is no common view on how
long and how deep the recession will be and how to evoke the recovery. To
illustrate this I want to note that one group of economists believe that
cause of this recession is not terrorism, but rather the economic and
financial imbalances that built up during the late 1990’s, and that the
incident of the September 11th was only a jolt to aggravating the
situation. Firms overinvested and overborrowed due to inflated expectations
about future profits. Households borrowed heavily too, believing that share
prices would rise forever. Thus, it will take time to bring consumption,
investment and loans to their natural rates. Despite this, there is also a
point of view that the events of September 11th have made a V-shaped
recession and recovery more likely: a swift slide down one slope,
sufficient to propel the economy up the next. Now it is high time to
consider facts, mainly statistical, which are important in the analysis. Economic data published since September 11th have, not surprisingly,
been gloomy. America's industrial production fell in September by 1%. That
was its 12th successive month of decline, the longest unbroken fall since Thus, according to the GDP report of the government, the economy
contracted in the third quarter. There is also one factor, which some specialists consider to be one more evidence of weakening economy: profits of confectionery companies grew this year by 15%. Statistics say that this is often an indication of recession, as many people can’t satisfy their luxury wants any more, but consuming larger amounts of sweets, which are comparatively cheaper. In addition with the wide-spread view that the country has entered its first recession in a decade, analysts are predicting that inflation pressures, which have been moderating for a year, will retreat further, especially in the area of wage pressures, as the surging unemployment rate dampens workers' demands for salary increases. Economists are afraid of that continued fallout from the attacks, worries about anthrax in the mail, tumbling consumer confidence and rising unemployment, will keep consumers tightfisting, further weakening the economy. But let us now switch to the more optimistic prediction as many
economists still reckon that America's recession will be brief and mild. September 11th, to their lowest level since the early 1960’s. President Bush, meanwhile, wants Congress to quickly pass a package aimed at stimulating the economy through new tax cuts, increased government spending, emergency relief, which could amount to 1.5% GDP – the biggest fiscal boost in one year since 1975. The hope that America's recession will be mild appears to have helped
share prices to recover worldwide. Many stockmarkets have almost regained
their levels on September 10th. Main indexes - Nasdaq, S&P 500, DJIA - are
edging up, though in comparison with December 31st, 2000 they are
respectively 23%, 13.6% and 8.9% lower. Considering Commodity Price index
change on October and on the whole year we face practically the same
situation: change of Industrials index on one year is -15.7% and on one
month +2.7%, change of Food index -2.7% and +3.0% respectively. The same
applies to other commodities as well as for all items. As for me I believe in the USA. There is one common feature of Russian and American folks I can distinguish and admire, it is that in the most dramatic moments each nation unites and in spite of all obstacles, troubles and difficulties overcomes the crisis. This has been proved not once in course of history of both countries (not without any exceptions, of course). There are many reasons for a sharp decline in the US economy, but some
factors that could amplify its recovery and further growth also exist. Both List of resources used in preparing the report:
www.economist.com
www.usatoday.com
www.reuters.com
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