recovery brightspot

Name

11/8/2011

Assignment 6: paper 1

The article that was read is from Bloomberg Business week for the week of November 7- November 13 2011. The title of the article is Surprise! Carmakers are a recovery bright spot, it can be found on page 19. By 2015 carmakers plan on hiring or bringing back 25,000 people this includes 4,000 people in the 4^th quarter of 2011. In part the jobs being created are a reaction to the Japanese earthquake which caused supply disruptions which lead to low inventory on car dealer lots. Edmunds.com is an auto industry researcher who estimates that 13.5 million new cars and trucks will be purchased next year up from the 12.6 million bought this year.

The auto industry is the United States largest manufacturing sector. Most of the assembly jobs being created are moving to the Southern states due to lower taxes and lower labor costs. The new jobs being created are from Domestic, Asian, and European makers. The jobs pay $15.00 an hour lower than veteran autoworkers in unionized companies. Toyota’s executive vice-president of engineering and manufacturing predicts that the U.S auto industry will create 88,000 additional jobs. When an auto company expands or builds a new manufacturing factory it is an investment that will remain in place for many years while providing an economic boost to the community for possibly decades. The Center for Automotive Research estimates for each worker hired creates seven other jobs by suppliers or spending from the new hires. 

The value of the United States dollars has become weaker compared to the yen and euro. While in developing economies the cost labor is increasing, this has made manufacturing in the United States more appealing. International automakers added 6,350 jobs this year with 3,400 more in 2012. Toyota, Honda, Nissan and Mercedes are expecting to expand their U.S. operations.

Full employment in one of the four macroeconomic goals, this article is about jobs being created in the United States. The current unemployment rate in the United States is 9.0% so any jobs that are being created are looked at as an improvement. With the expected 88,000 additional jobs expected to be created from automakers 25,000 new jobs clearly show how the multiplier effect is expected to give a boost to the entire economy. Making sure there are enough jobs for people who want them is an important part of macroeconomics. One of the goals of the Federal Reserve is to create an environment that allows for full employment. This shows the importance of getting people to work.

When a person is hired into a new job with long-term earning potential they feel more secure about their future and tend to spend more. This increased spending causes other businesses to add more employees to serve the increased customers. With people confident in their future and spending more, creating new jobs this leads to eventual gains in the gross domestic product. Employment gains often are a sign of a strong or improving economy. The lower the employment rates the closer to full employment we get. We will not get to 0% unemployment due to people changing jobs, people who do not have the skills for the jobs that are in demand and people unemployed due to seasonal reasons.

More stories about job gains can lead to people feeling more confident in the economy, which can spur on additional spending. Someone who feels the economy is starting to create jobs will feel less stressed about losing their current job and may increase spending. Improvements in the labor markets helps support confidence in the entire economy, this could have the potential to create more jobs just because people feel better and may spend more.