For the term paper students will choose an article related to any of the topics we have covered in the online coursework. The articles could be found on msnbc.com, nytimes.com, economist.com., cnn.
Student Name Principles of M acroeconomics “All the recession warning signs this week” by Ramishah Maruf Are We Approaching a Recession? As many people have noticed and made peace with, the United States economy is not in its prime state and many things have indicated this shift in its status. The article I have chosen to analyze, “All the recession warning signs this week” by Ramishah Maru f, discusses some things that indicate a recession in the future for the United States. The article begins by addressing the elevated levels of inflation and mentions how the consumer price index has reached the highest the U.S. has seen in four decades. M aruf then mentions how “the Fed is raising interest rates at an aggressive pace” with hopes of reducing economic activity. He divides the remainder of the article into sections where signs of recession can be seen including “Copper Prices, Purchasing Manag ers Index, Consumer Sentiment, Gas prices, and Housing Slump.” In each section, the situation in relation to the condition of the world is described and most sections include factual evidence supporting the claims made in each of them. For example, copper prices have dropped “more than 11% in two weeks” and even though it is usually a high demand product, the “demand disappears when the economy contracts” (Maruf, 2022). This is how the ending portion of the article is structured, addressing the signs pointi ng towards recession with a brief explanation. The article itself was well written and easy to understand for someone familiar with the terminology used throughout. While is it not very technical, I feel like the article could have had more factual eviden ce to support each claim made about the indicators of a recession because even though we are experiencing some of the things in our daily lives, more statistics would have proved how each of these things indicate recession in the future. For example, the s ection about gas prices includes no information of percentage increase of gas prices compared to the past and only has a quote from an investment officer, Peter Boochvar, saying how the situation “has recession worries written all over it.” Aside from this , the article contained ideas that were easy to understand since I was already familiar with them, like consumer price index, inflation, and interest rates, and ideas that were easy to understand if I was not, like purchasing manager's index. The author fa iled to include data displaying the changes seen now versus in the past and use it to construct their claim of why the economy could enter a recession because of how the Student Name Principles of M acroeconomics “All the recession warning signs this week” by Ramishah Maruf factors have changed. With the data, the article would have had more of a supported cl aim, and it would be more fact based rather than a piece displaying what the author has observed. After reading the article, I can confidently say that I agree with the information it contained and discussed. Even though I am no expert about the U.S. econ omy, I can recognize the changes to my lifestyle between rising prices in gas and housing. I do believe these factors point towards a recession however, I would agree more if more data was included about how each factor has changed over time and more of an explanation about how these changes specifically relate to a contracting economy. One thing I can’t seem to get, however, is the idea of how raising prices to lower economic activity assists with lowering prices. In my mind, and from what I have learned i n my economics class, lowering prices increases demand while increasing interest rates and inflation lowers demand. As mentioned in this article, the increasing prices helps with lowering economic activity which then lowers prices, which I understand, howe ver, wouldn’t the lower prices increase demand, therefore increasing prices all over again?If there were more details explaining this process/ cycle, I think I would have understood the benefit of decreasing economic activity for the world but without it, I disagree with the idea that reducing economic activity benefits the economy because I am confused how the prices wouldn’t rise right after. This article covers information ranging from the consumer price index to inflation, and even to interest rates, which are some of the most important, I believe, topics in economics. The consumer price index (CPI) and inflation go hand in hand as CPI is a method to measure inflation rates so as inflation increases, the CPI increases. The CPI is currently at an all - t ime high, so it is important to understand how inflation plays into it and influences the level it is at.
This was easy to understand for me since I already knew both what CPI and inflation was and the relationship between the two. However, having the rela tionship between them explained would have made the article, and the ideas discussed in general, clearer and easier to understand. I would also recommend the author include more data besides quotes from credible people to support the information presented in each of the subsections like gas prices and housing slump.
Furthermore, I would like to understand how reducing economic activity to then lower prices would help the economy when, in my mind, the lower prices would cause an increase in demand, Student Name Principles of M acroeconomics “All the recession warning signs this week” by Ramishah Maruf therefore increasing the prices all over again. Is this a cycle that I just have not realized or do the prices stay down once they reduce the first time? With all this to consider, everyone has personal, social, and civic responsibilities they must account for when dealing with the state of our economy. Socially and civically, one must remain informed about the state of not only their community but the world since one small change can make the world of a difference. For instance, gas prices. They may be high in one community but they are also high across the country so it is important to know what you can do to join the fight to combat the rising prices but also know what is out of your control. Personally, one should stay informed and educate the people around them about the economy because things like inflation and interest rates affect large groups of people. The more everyone understands, the more people can learn how to make good decisions about their lifestyles and the best things to do with their money. The eco nomy is constantly changing so understanding the ways to adapt makes the ups and downs, rising prices, a contracting economy, and/ or a change in lifestyle a whole lot easier. Maruf, R. (2022, June 26). All the recession warning signs this week | CNN bus iness . CNN.
Retrieved June 26, 2022, from https://www.cnn.com/2022/06/26/business/recession - signs - roundup/index.html All the recession warning signs this week By Ramishah Maruf , CNN Updated 11:42 AM ET, Sun June 26, 2022 Student Name Principles of M acroeconomics “All the recessio n warning signs this week” by Ramisha h Maruf Summer 2022 First Five Weeks Powell: Recession aft er rate hikes certainly a possibility 01:16 New York (CNN) It's the question everyone is asking: Are we about to enter a recession? A tepid stock market, soaring inflation, and rising interest rates have left Americans less than optimistic about the state of the economy. Consumer sentiment has plunged to a record low, according to a University of Michigan survey released last week, fueled by frustration over high prices. Earlier in June, the consumer price index jumped to its highest level in 40 years . The government's primary inflation gauge saw prices surging 8.6% for the past 12 months. And now the Fed is raising interest rates at an aggressive pace as it looks to slow down economic activity. To be clear: we are not in a recession, at least not yet. But signs of an ec onomic downturn are cropping up all over, in sectors from commodities to housing . Here's what CNN Business reported last week: Copper prices Prices for the metal hit 16 - month lows on Thursday after dropping more than 11% in two weeks -- that's bad news for investors who view copper prices as a bellwether for the global economy. Student Name Principles of M acroeconomics “All the recessio n warning signs this week” by Ramisha h Maruf Summer 2022 First Five Weeks Copper is widely used in construction materials, and it faces increased demand in an expanding economy. That demand disappears when the economy contracts. Prices shot up earlier this year when Russia, which accounts for 4% of global copper output, invaded Ukraine. Traders who were concerned about short supply began hoarding the metal. And now, copper prices are falling. "Copper prices are just starting to account for the fact that global growth is slowing," Daniel Ghali, director of commodity strategy at TD Securities, told CNN Business' Julia Horowitz. Purchasing Managers' Index The index released by S&P Glo bal on Thursday found that US private sector output slowed "sharply" in June. Chris Williamson, chief business economist at S&P Global Market Intelligence, said producers of non - essential goods are seeing a drop in orders as consumers struggle with rising prices. The Fe d's aggressive interest rate hikes are dampening the mood further. "Business confidence is now at a level which would typically herald an economic downturn, adding to the risk of recession," Williamson told CNN Business' Julia Horowitz. Consumer sentiment A closely followed University of Michigan survey released Friday found that US consumer sentiment hit a new record low in June - — the lowest recorded level since the university started collecting the data 70 years ago. The June index saw a 14.4% drop since May as consumers became increasingly alarmed about inflation. About 79% of those consumers said they expected bad times for business conditions in the upcoming year, the highest level for that metric since 2009. The percentage of consumers who blamed inflation for eroding their living standards, 47% according to the June index, is only one percentage point lower than the all - time high reached during the Great Recession. Student Name Principles of M acroeconomics “All the recessio n warning signs this week” by Ramisha h Maruf Summer 2022 First Five Weeks "As higher prices become harder to avoid, consumers may fe el they have no choice but to adjust their spending patterns, whether through substitution of goods or foregoing purchases altogether," Joanna Hsu, Surveys of Consumers director, said.
"The speed and intensity at which these adjustments occur will be criti cal for the trajectory of the economy." Gas prices The good news: Americans could find some relief is on the way for gas prices. The bad news: It's because traders are betting on a recession, CNN Business' Allison Morrow said. As US drivers felt the pain at the pump, they began pulling back on gas this spring, reducing demand and bringing down the price. Though pullback of demand could bring temporary relief, it also points toward broader economic concerns. "This morning's market action has recession worries writ ten all over it," wrote Peter Boockvar, the chief investment officer at Bleakley Advisory Group, earlier this week.
He put the odds of a recession this year at 99% because "nothing is 100%." Housing slump Better news: A cool - down of the housing market may not hurt the economy and stock market. Prices have spiked, leaving homeownership out of reach for many Americans, and mortgage rates have spiked after the Fed's rate hikes and a surge in bond yields. But Lennar, a homebuilder whose shar es are down nearly 45% this year, reported better than expected earnings on Wednesday and a 4% increase in new home orders. Lennar's CEO, however, remained cautious, saying in the company's second quarter earnings release that it's a "complicated moment in the market." Despite the slowdown in the housing market, experts are hopeful that it won't spread to the economy the way the housing bubble burst in 2008 did. Student Name Principles of M acroeconomics “All the recessio n warning signs this week” by Ramisha h Maruf Summer 2022 First Five Weeks "Banks are in much better shape now, and they are not giving out loans to people with no credit or bad credit," Michael Sheldon, chief investment officer with RDM Financial Group at Hightower, told CNN Business' Paul R. La Monica. "If there is a recession, the impact on housing could be mild. There are not as many imbalances as we had before." CNN Bu siness' Julia Horowitz, Alicia Wallace, Allison Morrow and Paul R. La Monica contributed to this report.
