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.in retrospect was correct about consumer spending leading the economy out of recession but he, like me and most people in 2002, missed the economic effect that Fed free money & incredibly lax lending standards were going to have in the housing sector 2003-2005.
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.See the abridged online version at Manchurian Mandate (with photo gallery, map, and multimedia.)
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I do not share the author's politics. I posted these links to suggest that the moves towards a market economy in China might not be going as smoothly as the headlines might suggest.
posted by jason's_planet at 12:46 PM on November 12, 2006