Tuesday, January 31, 2012

Consumer Confidence and the Effect on the Economy

Today, I wrote on my personal blog, An Economic Mindset, the recent release of the lowered consumer confidence rating.  I discuss the effects that can be seen in the US economy, but what about the global economy?

The initial thought that comes to mind is the progress made by the EU to establish a more fiscal policy to help with the Eurozone crisis.  But will the same problems within the United States eventually find their way to the EU?

We see the three major problems in the United States for the drop in consumer confidence: job creation, fuel prices, and the housing market.  With each of these three factors, the Eurozone can be seen to be struggling with all of them at this time.  I believe that the EU is going to have to struggle in similar matters to the United States with its development to control and growth in the European economy.

References:

  1. Amano, Evan. "Consumer confidence and the Effect on the Economy". An Economic Mindset. http://aneconomicmindset.blogspot.com/2012/01/consumer-confidence-and-effect-on.html

Saturday, January 28, 2012

Cisco's Chambers Backing Romney for President

A large corporation has spoken out about the opinion towards the 2012 presidential election.  CEO John Chambers of Cisco Systems has openly supported presidential candidate Mitt Romney because of his plans to lower the current 33% corporate tax (as stated in the most recent debates, Romney hopes for 15%).  Chambers explains how much cheaper running a business in other countries, including China, Russia, UK, and Canada.

The belief that cutting corporate tax will bring jobs and corporations back to the United States is bold, and seems highly unlikely even with lowered rates.  Countries including China and Russia hold far lower wage levels that even if the corporate tax were to be cut in half, there would be so much uncertainty surrounding whether there would be a financial benefit to bringing companies back.  The United States would surely benefit from job creation, but the bigger question would remain to what would happen to funding of the government in the long run.

As stated in the last post, the percentage of money being put into the education system in America is at a low.  The best way to build on our human capital is giving Americans the best opportunity to succeed and innovate.  This is where economists need to push the realization that the costs of cutting tax money will ultimately harm the economy and the citizens of the US.  This election could effect greatly the outcome of the United States over the long run.  

Again, we fall back to the dispersion of wealth in the United States.  We need to recognize that the rich are getting  richer, while the lower and middle class are being left in the dust.  If these levels of income inequality continue to occur, there will be major problems for the country as a whole.  I truly understand where people believe that having corporations return to the United States could benefit our country, but if only 1% are reaping the benefits of the economic growth, will there be sustainability in the US economy?

Reference:
Smith, Aaron. "Cisco's Chambers Backs Romney for President". CNN Money. http://money.cnn.com/2012/01/26/news/economy/davos_chambers_romney/index.htm?iid=SF_E_River