COMMON CULPRITS OF A SLUGGISH ECONOMY

Lack of economic progress has evolved to a global conflict over the years, as growth seemed elusive despite several efforts by each country. From 1947 to 2000, the US has seen a hike of only 2.2%, which was further slashed to 0.9% in the succeeding years up to present, while other countries have done worst.

Economic stagnation has been defined by some as a sickness wherein only those at the top of the income scale benefit from the rising of assets, while majority have experienced either flat or declining funds.

Recently, an advisory service company provided a report on the usual causes of this crisis, based from the opinions and statements of policy workers and experts in the field, although these are only partial explanations and logical fallacies may be present in the theories.

False interpretation

In some cases, the assumption that the reality of inactivity is due to aggregate measures lagging behind modernization. Many see the the unemployment rate relatively low, while corporate margins are high as well as stock valuations, leading to the illusion that does not account for software development.

Recession aftermath

Often, today’s condition is compared to the great recession to carve a mindset that the economy is remarkably better than before. However, economists suggests that most complications today are still rooted from the previous adversity which have deeply damaged investments. To give a glimpse, data shows that labor productivity is only at 0.3% annually from 2010 to 2015.

Rates decline

There is a term called secular stagnation wherein interest rates fall and negatively affect demand for capital. The economy, has insufficient demand and hence suffers from excess supply, hindering the ability to generate an inflation averaging at 2%.

Innovation shortage

Contrary to the first concept, this one entails that individuals nowadays are not innovative enough, and instead of inventing new things, today’s group of executives are highly focused on gadgets and are more inclined with software usage.

Inefficient policies

Studies conducted by professors show that tight measures are more effective than stimulus programs. Basing from this, the US and Europe private sectors have been largely burdened by huge spending, high regulation, and low interest rate protocols.

Special government treatment

Big businesses sometimes form a bond with the administration wherein they are able to access certain favors such as biased settlements and excessive returns with flat rates. This causes the companies to halt efforts to improve the marketplace.