Business

Problems with economical growth
by Jana Passova

Factories in the United States feel decrease of demand for products that they manufacture. There was the highest decline of demand in five months in January. The orders for manufactured goods dropped 2.5 percent. Business is situated in very uncertain environment of economy. The economy has started to have bigger problems since beginning of this year. Mostly retailers and manufacturers are not in enviable situation. The weakness become evident mainly in demand for costly durable goods as cars, planes, computers and machineries. Demand of this category of products dropped 5.1 percent in January. Also the productivity of workers declined for final three months of 2007. That for manufacturers means only one thing. When the productivity gets worse, labor costs increase. Unit labor costs rose at a 2.6 percent in the last quarter of 2007. This all is just a result of problems in the housing and credit markets. People are more careful in spending money. Increasing prices of oil, energy and row materials do not help to work out the situation too much as well. According to Ben Bernanke, Chairman of the Federal Reserve System and Chairman of the Federal Open Market Committee, the most important concernment is to secure economic growth. The economy almost stopped at the end of 2007. The growth was only 0.6 percent. And it might be even slower. One possible action that can help economy to grow again is to cut interest rate. The first time a strategy was used in September 2007 and the second time rates are going to be lower on March 18 this year. Another problem is the inflation that needs to be keep under the control.

by Jana Passova for PocketNews (http://pocketnews.tv)

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posted by Blog TechSource @ 3:06 AM