The only source left for an increase of demand is consumer spending. Therefore, it seems that if the U.S. economy is to recover in 2002, it will require continued increases in consumer spending to provide the boost. How likely is such strong consumer spending in the middle of a recession? Consumer spending depends mainly on household disposable income, which in turn depends mainly on employment and hours worked. If disposable income is to increase in the year ahead, then employment and hours must increase, i.e., firms must hire more workers and run longer shifts.
Revitalizing Dongbei, as the Northeast is known, will test China's run of economic success. The region's former strength—the ability of its state-owned enterprises to produce cars, steel, ships, and oil in the early days of the People's Republic—has become a liability. Applying the formula that has worked elsewhere—foreign investment and export-driven growth—the government has closed or partly privatized many industries and used investment from neighbors such as Japan and South Korea to build modern software and manufacturing plants. But with China's highest urban unemployment rate and widespread corruption, the Northeast will likely stumble, not sprint, towards economic success.
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