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Decrease in Unemployment Rate: True or False?

https://i2.wp.com/www.americanprogress.org/wp-content/uploads/cartoons/2009/03/img/031709.jpg

Source: American Progess

As the rate of unemployment has been dropping in 2013, we see this as a lagging indicator that more jobs are becoming available. The unemployment rate hit a peak in 2010 with a high of 10%. Ever since it has been steadily decreasing and most recently reported to be 7.5% as of April 2013 (Bureau of Labor). One of the largest gain in jobs occurred in Texas at 33,100 and the second largest in New York at 25,300 jobs gained. (Bureau of Labor).  As we near the end of the month of May, we see that an unemployment rate has not yet been determined for this month showing that it is a lagging indicator for how our economy is doing. The decreasing unemployment rate renders hope for our economy. This is due to the fact that there are more jobs available because more production of products is being called for as a result of consumers spending more money and demanding more products. More production to meet consumer’s demand simply cannot be accomplished by a minimal amount of laborers therefore more jobs become available thus lowering the unemployment rate.

As this rate continues on a downward trend, we see consumers spending more and more money to grow the GDP (gross domestic product). Also, as more and more people are obtaining jobs, more and more people have more money to spend which will also grow the GDP. Because consumer spending makes up approximately two-thirds of the GDP, putting more money in the pocket of consumers encourages them to spend more and increase the GDP. This is necessary in order to grow our economy because GDP is based on consumer spending, investments by businesses, government spending, net exports. America’s net exports are a negative number because we import more than we export and that lowers the GDP.

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Source: Bureau of Labor Statistics

Although having more money in the pockets of consumers for them to spend is an ideal way to increase GDP because it makes up such a large portion of it, that is not always what happens when people have more money than before. The paradox of the Thrift suggests that as consumers obtain more disposable income, they will save more of it to protect their self-interest which in turn hurts the macro-economy. This idea lead to Keyne’s solution to increase government spending in order to make the depth of the trough smaller. This solution suggests that government spending is the way to fix the problem. At the end of 2012, however, both solutions were put into question and taxes were raised, lowering the amount of disposable income consumers have to spend to grow GDP and by March government spending was cut which slows the growth of  GDP as well.

It turns out that the decrease in the unemployment rate is due to the fact that there are half a million fewer people in the labor force now (Money CNN).  What seemed like good news for the economy at the time the new unemployment rate was calculated is really just a decrease in people who are in the work force. The unemployment rate dropped for the wrong reasons meaning that there has not been a significant increase in consumer spending therefore no significant increase in GDP.

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Categories: B1 Tags: , , ,

Burst Your Bubble

February 28, 2013 Leave a comment

Source: Don’t Bubble

On the second day of government class, we did an assignment on bias and filter bubbles (Parish Government). I had never thought about this topic and how it could potentially be related to government. It was shocking to me to discover how what we search on our computers and phones enables our later searches to be narrowed down to seemingly only what we want to see. Who would have thought that when the person sitting next to me in class googled the exact same thing that I did at the exact same time, different search results popped up for both of us. Some articles were higher up on the list on my search and some articles that popped up on her search weren’t even present on mind. Internet sites such as Yahoo, Google, and Facebook all control what we are seeing based on the information they have “gathered” on us as individuals.

Source: Audio Editions

Sites such as Yahoo, Google, and Facebook edit what we see on the Internet based on previous searches. Google looks at everything you are doing, including where you are searching from, and uses that information to filter your searches to what it believes you will want to see. Yahoo is a personalized site where people will receive different information when searching for the same thing (TED). Facebook uses recent searches on your computer to customize the type of advertisements that pop up on the sides of your page. If you had recently searched for an SAT tutor then logged onto your Facebook account, it is likely that you will see and add for SAT online tutoring or SAT prep books. The Internet is showing us what it thinks we want to see based on past searches instead of what we need to see. We don’t have a choice of what gets edited in and we don’t see what gets edited out. Factors such as political beliefs play a major role in what the Internet filters for a specific person (TED). If someone is constantly searching for a certain political party, the Internet will eventually detect those searches and start to filter our searches so that we are only seeing the results that mirror our political beliefs. We are cut off from other’s innovative thoughts about certain factors and find ourselves stuck in a box of our own beliefs not willing to accept other points of view. We become trapped and see no way other than our own while there are so many different ideas floating around that could be better or that could add on to and improve our own thoughts. Being deprived of all ideas does not improve an individual and his/her knowledge but rather hinders him/her.

We need to have some control on what gets through and what doesn’t because, sometimes, the limited information given to us only isolates us from the rest of the world and important issues that we should be cognizant of. This disconnection from the rest of the world can easily harm our society instead of help it. Being unaware of certain issues and view points just because an individual searched for an opposing view is trapping him/her in a bubble that he/she cannot burst. I believe that we must work to burst this filter bubble in which we are confined in order to broaden our perspectives on issues that involve opinions and ideas other than our own.

Congress’ Blunt Knife

February 21, 2013 2 comments

Source: Washington Post

While everyone may be exhausted from hearing debates on the “fiscal cliff,” America still has a lot more grief ahead with the budget sequester. Congress may have found a temporary solution to the “fiscal cliff” by trying to solve the debate on tax increases, but it has put off spending cuts in order to have more time to avoid the budget sequester. A part of the Budget Act Control, the sequester was put in place during the negotiations of the debt ceiling in 2011 as a “last resort” that promised spending cuts both Democrats and Republicans would suffer from. This was considered a compromise for the debt ceiling (The Washington Post). This agreement was enacted in order to avoid a situation that Congress is currently in because if they don’t make a deal then the sequester will go into effect and 10% cuts across the board will hurt America greatly. The cuts in defense will devastate the Republicans whereas the cuts in other departments such as research and education will shock the Democrats (Forbes).

Currents events and articles on these topics have helped me to have a better understanding of what exactly is going on. In our “fiscal cliff” project, my group focused on both the tax increases and the spending cuts, but we did not understand that if a deal was not made on the spending cuts then the sequester would be put into action. We were unaware of what exactly the sequester was and what it meant for our nation. Now that solutions to tax increases have been reached at the end of 2012, Congress has until March 1st to come up with the solution to what seems to be the bigger problem of the fiscal cliff (Forbes). If they do not reach an agreement then severe budget cuts in departments such as defense and other domestic spending will devastate our nation and we will fall off the cliff even though it was temporarily prevented by the agreement on tax increases (Forbes). It is not smart to have across the board spending cuts of 10% in every department. The cuts need to be carefully negotiated. There is no doubt that there have to be cuts to lower our debt ceiling but it must be done surgically and cut where it will be least painful to our country. Making cuts evenly across the board will be like using a blunt instrument on our country to open it up and watch it bleed out in a recession.

Source: Forbes

Focusing on how current events are connecting to our government class, this story has helped me narrow my understanding of what the budget sequester is. While we were discovering the details behind the fiscal cliff, I had a lot of trouble understanding exactly what was going on. I leaned on my teammates to help further my understanding, but learning together as a class helped me push my mind to understand. This article about the budget sequester relates to our government class because while we have been discussing current events, the second part of the fiscal cliff, the budget sequester, has been brought up many times. It is a topic of hot debate and it is interesting to see everyone’s point of views on the possible decisions to be made. We see that it is time for our government to step up and lead our country out of the possible turmoil that is in our future if nothing is done, and in this government class, we are taught how to stand up and lead. We are taught how to be responsible upstanding citizens of this country and I believe that is something that directly applies to the situation that our country is currently facing with the budget sequester. It is time to stand up and be responsible leaders.

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