Nick's Place

Nicholas Barnard EC200 - Journal #7 MWF 1:00-1:50

Our economy has been growing at a hectic pace ever since I remember paying any attention to it in the news and other media.

Usually I get most of my news information from CNN Headline News - I've been addicted to it as long as I can remember, I used to use it as filler (and still do to some extent) during time periods when there is no interesting TV on, and there is something I want to do later. It is an efficient use of my scarce time, I get a general update of news every so often in a predictable format, I don't have to spend time adjusting to different formats. I'm used to getting a smattering of economic numbers, which while they mean something to me, are not totally indicative of the true economic story.

I've begun to start reading USA Today more, and its economic analysis. I noticed an article entitled “Economy runs hot, cold: Buyers binge, factories slow” in the November 2^nd edition. The contradictory title comes from the fact that “…the National Association of Purchasing Management (NAPM) index showed a decline in the pace of industry in October…” but, “… consumer spending - which accounts for most of the nation's economic activity - has rebounded after a spring dip…” because, “`consumers are still sitting on an enormous pile of wealth (from higher stock prices and home values) that didn't exist a few years ago,' says Ian Shepherdson, chief U.S. economist for High Frequency Economics.”

From these snippets the consumer spending is speeding ahead, while manufactures are facing a slow down due to harder conditions. On the surface this appears to be stagflation: one segment is slowing down, and the other is speeding along. But in reality this may encourage inflation again, since manufactures are going to have to raise prices, and consumers will have the money to pay for the increased prices, leading to a continuing growth. But, due to the strong US dollar and oil prices, the difference in exports and imports will rise, and negate some of this consumption lead growth. What will happen? I surmise that the economy will have a hiccup if anything.