The Economic Future in the Year 2000 :: essays papers

The scotch Future in the Year 2000 The economy has performed exceptionally well for the past several long time, combining rapid growth and very low unemployment with declining inflation. Not only has the expansion achieved record length, but it has through so with far stronger growth than expected, stated Federal entertain prexy Alan Greenspan in his remarks to the National Community Reinvestment Coalition annual conference in Washington (Business Week, The McGraw-Hill Companies, frugal Outlook, March 6,2000). Figures show that since 1996, the growth of GDP has averaged to a greater extent than 4 pct, compared with an average of about 3 percent since 1973. Because of those four years of rapid growth, the unemployment rate has fallen to 4.1 percent, its lowest level since January 1970. Consumer Price tycoon (CPI) inflation, excluding food and energy prices, had been vacillating at about 3 percent per year earlier in the decade but was roughly 2 percent over the past year (Ba nk of America, Economic in Brief, November 1, 1999). untold of the auspicious late(a) economic developments can be attributed to a rushing in productivity growth. Alan Greenspan noted in his statement that output per moment in the non-financial corporate sector had increased since 1995 at nearly ingeminate the average pace of the preceding 25 years (First Union, Monthly Economic Outlook, March 7, 2000). This rapid productivity growth allowed the economy to grow at a faster pace without raising the rate of inflation. However, the growth of consumer pack is exceeding the increase of productivityboosting employment, tightening labor markets, and raising concerns that recent growth rates may not be sustainable without sparking a rise in inflation. After spending the past several years, extolling the virtues of alter productivity in allowing high growth with less inflation, the Federal Reserve Chairman, seemed to turn the tables in his Humphrey Hawkins testimony, stating that the spurt in productivity has produced expectation of higher profit growth, which, in turn, have resulted in higher equity valuations. That gag in equity prices is seen as the primary driver of the wealth doing, which he believes has created an imbalance between demand and supply, raising inflation pressures (Business Week, The McGraw-Hill Companies, Economic Outlook, March 6,2000). Speculations of this occurrence may over the long term omen that the higher the trend growth of productivity, the lower the inflation rate collect to the restraint of labor costs.