TheAmerican people’s pay has increased by 0.6% in October and 4.9%increase in the paycheck, higher than they were previously has beenwitnessed according to Commerce Department. This reflects a rise of3% from 2% of paychecks in comparison with the period after recession(2010-2014) that ended in 2009. Fewer people need employment aid, andemployment rate has hit 5% the lowest since 2008 and in 2015 Octoberalone 271000 jobs were created. There have been increased spending onhouse purchases as a result of low mortgages rates and strong hiring,evidenced by a rise in the sale of new homes by 15.7 % since Januaryto October 2015.
Savingshave increased in October 2015 by 5.6% the highest record since 2012. There is increased investment in the business sector associated withthe purchase of machinery and equipment. The economic drags that wererelated to manufacturing sector seem to be fading. US plants inOctober received more demand for durable goods, including, machinery,computer and steel. Inflation is almost within the FED target rate of2%.
Thereis an anticipated increase in shopping of household goods in theholiday season according to Sim O’ Sullivan Chief US Economist atHigh- Frequency Economics. Also, Gallup anticipates a spending of$830 million on average the highest since 2007. A survey according tothe University of Michigan shows that there is an increased optimismin low and middle-level income earners compared to high-incomeearners. There is an expected quarter annual growth of 2.7% from theearlier growth of 2.1% growth in the first three-quarters of 2015.TheFederal Reserve likely to raise their interest rates with theanticipated inflation.
Indiscussing the significance of the article, it is important we remindourselves what the critical issues are. The key issues are, increasedpaycheck, increased and anticipated inflation increased and expectedincrease in consumer spending’s, low unemployment rate and recoveryin the manufacturing sector. This show that there is an increase inmoney circulation in the market and the economy is in the recoveryphase. The dollar circulation increase in the market would result inhigh inflation rates result to a cheaper dollar. To keep the dollarstable is the reason there is speculation that the FED might raisethe interest rates to control dollar circulation. Increased paychecksand decreased unemployment rates reflect an increase in standards ofliving and per capita income. Recovery in the manufacturing sectorshows that the economy is heading towards a boom and thus economicgrowth.
Mankiw,N. G. (2014). Principlesof macroeconomics.Cengage learning
RugaberChris. (2015, November 26). Sign of Steady US Economy: Rising pay andSolid Job.