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Strategies for Economic Prosperity

In: Business and Management

Submitted By MONYA2024
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Strategies for economic prosperity
Mark Whitehouse and Greg Ip. July 29, 2006.
Economic growth
Mark Whitehouse and Greg Ip in their article on economic growth explain on the price rise as well as on growth slow. Explains that during economic expansion, prices and wages are increasing, a potentially noxious mix for a Federal Reserve will try to contain inflation without triggering a recession. According to an advance estimate made by the commerce department economic activity slowed as a result of builders putting up fewer homes and consumers cutting on spending.
Economists explain that slowing growth and rising prices will continue to complicate Fed’s task of deciding what level of interest rates is high enough to contain inflation. However, it’s not so high to slay out economic growth. Between April and June inflation grew at a rate of 2.5% whereas the core personal consumption index rose at an annualized rate of 2.9% in the second quarter. More so the level of worker’s wages and benefits rose at 3.6%. Once the Friday report was released investors took up the vision that Fed would be more likely give the economy a break by holding the interests steadily at 5.25%. This report confirmed the predictions of the economists that cooling house market as well as the consumer spending will take a bite out of economic growth.
However, some economists had the hopes that business investment as well as improving the foreign trade would offset declines in spending and construction. This only came partially. A different report indicated that people may not be inclined to cut spending sharply. Another economist noted that the gap that existed between the wealthiest third and the poorest third consumers reached its widest pint in 20 years.
According to a research conducted by the commercial department the rate at which the...

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