Tag: economy

The Unbreakable Bond Between Investments And The Economy

A country’s economy expands with the improvement of capital goods structures and the increase of capital stock. This is all tied to capital investment. Without it, no economic expansion would be possible. When investors buy capital goods like factories, machineries, transportation, computers, tools, instruments, or anything that leads to people being more productive, the money used to purchase all this is then termed capital investment. The important thing to consider is that the equipment (bought by financial capital), would need humans to design, build and operate.

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Image source: efdreams.com

Now let’s get to the interesting part – how all this helps our economy expand. When capital goods are improved, the more productive we all become. Look at the fisherman who once fished with a small boat and a small net. He invested in a bigger boat, and some machinery to haul his new mammoth-sized net. He caught more fish than he ever did before. Mr. Fisherman now has a bigger house, an extra car, and a better life. Little did he know that he helped the economy expand.

Another great thing about the increase of a country’s capital investment is the subsequent improvement in the quality of research and development – in businesses. Better R&D means higher productivity. Workers are more efficient and what they produce are better. Then they become like Mr. Fisherman, with his better life.

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Image source: cntrline.com

Hi there. My name is Steven Sorensen, and I’m a CPA and business writer based in Colorado. Learn more about business and investment by checking out this page.

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Facing all the odds, how is the U.S. economy doing?

The coming national elections have everyone speculating about the future of the U.S. economy, especially following Brexit and the increasingly low-interest rates. In an in-depth article, the New York Times has listed some of the good and the bad aspects of our economy. On the positive note, GDP is growing better than it looks, with a 2.4-percent increase not including inventories. Consumption expenditures also increased by 4.2 percent and contributed to a 3.1-percent rise in retail sales.

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Image source: regaltribune.com

According to Jim O’ Sullivan, chief U.S. economist at High Frequency Economics, the employment growth remains strong, with 255,000 new jobs created in July alone. This has made the unemployment rate steady at 4.9 percent. So far, more than 1.3 million jobs were added, and wages grew up by 2.6 percent compared to 2.2 percent in the same period from last year.

However, despite these strong numbers, the economic growth is still deemed to be slow as compared to what the situation was like prior to the 2008 global financial recession. There is a decline in business spending, especially in energy exploration, because of the drop in prices of oil and natural gas. This is seen as one of the key reasons growth is relatively slow. Worker productivity is also not that remarkable, marking a sharp blow to the country’s long-term prosperity.

In response, Professor John B. Taylor at Stanford University believes that a better-looking economy can be achieved by adopting policy reforms. Among his proposals were lower tax rates, free trade agreements, and regulatory reforms. Taylor believes that the economy is at the bottom of the recession and is ready for a restart.

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Image source: nyt.com

As a finance professional, I provide a wide range of advice to clients of all economic backgrounds and on issues ranging from accounting and economics to employee embezzlement and retirement planning. To know more, follow me on Twitter. Steve Sorensen here.