In this paper, we intend to analyze three articles, published in New York Times, The Economist and Newsweek. Each of them focuses on such topic as the development of the US economy and its struggle against the ongoing recession. Our main task is to evaluate the arguments, put forward by the authors and determine whether there they are evidence-based and objective.
The first article to be discussed is called Across the US, Long Recovery Looks Like Recession. It was written by Michael Powell and Motoko Rich and was issued in New York Times on the twelfth of October[1]. The authors argue that the US economy will not be able to recover from the recession in the near future. In particular, they say that the aftereffects of the crisis can be overcome in at least nine years. Their prognosis is based on the fact that current rate of job creation is rather slow (Powell & Rich, p 1).
Furthermore, they point out that housing prices still remain relatively low and as a result, people are very reluctant to work with banks. Another issue, mentioned by the authors is the lack of job security: American citizens are afraid of losing their jobs, and they cut down expenses, spent on consumer goods. On the whole, the authors’ overarching thesis is that American government has not identified the underlying causes of the global crisis or addressed the key challenges, faced by American society.
To a certain extent, one can certainly agree with Michael Powell and Motoko Rich. Their arguments are based on quantitative data and they appear to be quite plausible. However, the authors overlook the fact that in part, the on-going recession was triggered by external forces, which are not under governmental control, for instance, high prices on oil, continuous outsourcing, the existence of shadow banking systems, irresponsible money lending and other factors.
From the point of view of Keynesian economics, this economic crisis has been caused by inefficiency of private organizations (banks, large corporations, manufacturerers), and it is not directly connected with the policies pursued by the government.
The journalists accurately describe the situation, which has recently emerged but they do not propose any solutions. According to the authors’ estimations the US economy will regain its former strength only in nine years. Yet, it seems that the adoption of American Recovery and Reinvestment Act provide additional stimulus to American enterprises.
The thing is that according to this legislative act, more than seven hundred billion dollars will be invested in the development of infrastructure, the reduction of taxes, paid by companies and individuals, and construction of housing for low-income population[2]. This governmental incentive can subsequently increase job creation rate. Overall, we can say that the authors’ views of the US economy are too pessimistic and they do not really reflect all the complexity of the problem.
Another article, which is of great interest to us, is called Basket Cases: Consumer Goods in Downturn. It was written by an anonymous author and published in The Economist on the thirteenth of October[3]. The author tries to show how the shopping habits of American people have changed over the past few years and how this change is going to impact consumer goods companies such as Procter & Gamble, Kellogg or McDonalds.
First, the author argues that at present a great number of consumers prefer to switch from name-brands to store-brand products. For instance, those people, who once bought Kellogg’s cornflakes, now purchase cornflakes, produced by Wall-Mart because they are less expensive.
In the author’s view, this tendency is very alarming for consumer goods companies, as they can lose competitive advantage. This trend can be observed in the United States and throughout Europe and the author suggests that this new shopping attitude may remain even after full recovery of the US economy. The thing is that that many customers do not see any quality differences between store-brand and name-brand goods.
To substantiate his/her statement, the author presents the results of customer surveys, indicating that more and more people do not believe that consumer goods, produced by Kellogg, Heinz, or Procter & Gamble are superior to those ones, sold by large retailers such as Wall-Mart, Tesco or Target. As far as this customer survey is concerned, we should note that the reliability of its findings can be questioned, because we do not know anything about sampling procedures and analysis methods.
It is rather difficult to determine whether the conjecture, made by the journalist is in any way grounded. Many people state that cheaper goods are just as good brand-name ones because they are eager to retain their sense of prestige. In other words, they do not want to admit that they buy something second-rate. To some extent, this explains why so many customers favor store-brand products.
The thing is that modern marketing strives to emphasize not only the qualities of the product (its price, serviceable life, design, and user friendliness) but also those benefits which the customer will receive. One of these benefits is the intensified sense of prestige and high self-esteem. Contemporary advertising aims to convince people that possession of a certain product will make them more elitist. Such approach has been effective for a very long time, and it is rather unlikely that the situation will change.
At this point, it is too early to make any predictions as they will be too far-fetched. Nevertheless, the author’s hypothesis is quite interesting and it definitely merits more research.
The purchasing habits of American have surely been altered, yet, we do not know for a fact what will happen when the US economy overcomes the recession. Apart from that, we can suppose that marketing principles can change in the near future: probably, people will people will make less attention to the brand-name, but instead they will focus on its quality and price.
Finally, we need to speak about the article Don’t Panic about the Economy[4], written by Daniel Gross and issued in Newsweek on the thirtieth of July. The author attempts to throw light on the effects of global crisis on the economy of the United States. Daniel Gross points out that many economists are extremely concerned with the slow growth of GDP, namely 2.4 per cent growth rate. Nonetheless, the author argues that the real state of affairs is much more complex.
First, those companies, which are integrated into the global economy, have almost overcome the consequences of recession. In turn, those businesses, which deal only with US customers, remain weak. Secondly, the journalist says that this decade has been marked by easy fiscal policies, lax regulations, and inappropriate taxation policies. Thus, one should take the current economic recession as the surprise. As a matter of fact, the outcomes of such polices could have been far worse.
It is quite possible to agree with Daniel Gross’ arguments. Certainly, it has to be admitted that current economic situation leaves much to be desired: job creation rate is rather slow, real estate prices are not as high as they used to be, and leading companies still do not perform as successfully as they did in the period between 1997 and 2006.
Nevertheless, in comparison with the previous two years, GDP has significantly increased. Daniel Gross appears to be quite objective in his analysis, yet he does not provide any guidelines as to how the government should address the main challenges, encountered by American society.
Thus, we have analyzed three separate articles, which examine the struggles of the US economy against the worst economic crisis since the Great Depression. Journalists admit that America people still have to face many difficulties, which include unemployment, credit crunch, lack of job security and other problems.
Yet, the country has already passed the peak of the crisis. More than that, pessimistic views, expressed by many journalists are sometimes unfounded. Most likely, this can be explained by the fact that people compare their former well-being with the present day situation. We can conclude that the consequences of 2007 economic crisis will be noticeable in the years to come.
Works Cited
“Basket Cases: Consumer Goods in the Downturn”. The Economist, 2010. Web.
Gross, Daniel. “Don’t Panic About the Economy”. Newsweek, 2010. Web.
Powell, Michael & Rich Motoko. “Across the U.S., Long Recovery Looks Like Recession” New York Times. 2010. Web.
Footnotes
- Powell, Michael & Rich Motoko. “Across the U.S., Long Recovery Looks Like Recession” New York Times. 2010.
- American Recovery and Reinvestment Act of 2009.
- “Basket Cases: Consumer Goods in the Downturn”. The Economist, 2010.
- Gross, Daniel. “Don’t Panic About the Economy”. Newsweek, 2010.