Sunday, November 10, 2013

Shut down causes increase

After the government shutdown people had a uniform guess to how it was going to effect the economy. People expected the economy to suffer and cause prices to rise. They also felt that this would put a halt to job creation and job availability. But according to CNN this hypothesis is indeed wrong. For the month month of October it actually shows that there was a job increase in the economy. This recent increase in jobs makes it seem as if there was ever a government shutdown in the first place and people are less worried about the outcome. 

So how many jobs were added to turn around the possible outcome? Well the US economy added 204,000 jobs to the market which was way above the expectancy of the job growth. Since they added so many jobs , what made economist and citizens doubt this growth in the first place? If it has done so well what made them concerned about the outcome? What made them concerned what the budget of the economy. What caused the shutdown what budget battles in Washington. The battles led to about 800,000 federal employees being out of work. 

So what does this increase do for things like the bank? Well it makes the banks try to do thinks that will get their customers to spend money and not try to save it. Interest rates are very low around the developed world; near-zero in nominal terms and negative in real terms. This is part of a deliberate policy by central banks to discourage saving and encourage borrowing. It has also been seen as a way of boosting the stockmarket and thus as creating a wealth effect for individuals, and boosting confidence. So this increase in jobs makes the bank make decisions that cause the economy to be more equitable of fair to the people.

So though people the thought that the decision of the government were harmful and selfish and could also cause a lot of clean up, the decision actually was some what helpful to the coming rather than harmful. The decisions of the Fed impact, literally, every financial decision you make. The Federal Reserve has its fingers in your pocketbook to a greater degree than the IRS.The Fed's mission is to encourage as much economic growth as possible without raising inflation. The Fed has a dual mandate. They want to have low and steady inflation and a strong labor market.

 

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