Economic Reality Post Recession

Come what may, US will survive! Despite the fear of competition from other countries among some of the Americans, the country has done well mainly because of efficiency. The efficient countries will survive and do well, including US. The countries trying to hide their economies are not confident economies, whereas the US is an extremely confident. The business news channels are, however, stating otherwise!

The Gloomy Picture Is Not Complete

You may be an avid watcher of the business news channels, or a religious web surfer scanning the economic stories. You know that the economic problems of US are deep enough to say that US is facing a perilous economic future. While the previous scenario is not completely wrong, the possibility that people are not seeing the complete picture is still there.

Economy in a Stronger Footing

The US economy is on a stronger footing than what the experts’ prophesies state. While the investment rate remains paltry, and the current account deficit huge, the official numbers still don’t present the full picture. Businesses are actually investing a substantial amount more than what is presented by the official numbers. Even the savings rate are higher (they are actually positive) than what the figures show (negative). Even the US trade balance with the world is better than the newspaper figures.

It’s a Knowledge Economy Now 

US economy is on the road to becoming a knowledge economy, based on the strength of innovation and ideas. The government’s method of collecting numbers about tangible assets misses the products being generated by the knowledge economy. The statistics experts just don’t have a way of checking how much is being spent on the R & D and training. For example, the funds used up in researching and creating iPod don’t get mentioned in the government’s numbers. Even the cancer drugs and inhaled insulin are absent from these spreadsheets. To sum it up, the new generation of economists is trying to get hold of this shadow economy. Even Ben Bernanke notes that gross savings and investments are understated in the official records.

Recession as an Opportunity

Other important point worth noting remains that economists have learned from the great depression, and that the government’s action plan is actually slowing the decline of the economy and increasing the pace of recovery process. Also, the depression of 1930s was far different from what is the present situation. Also, while bear markets and recessions are painful and decrease the business activity, they do not have any substantial impact of new business activities. Half of the successful businesses today started their operations either during a recession or a bear market. Compared to the larger organized business sector, the job creation by small startups is much less prone to volatility. Also, many of the new firms don’t really rely on external financing, which means recessions don’t really affect their business plans.

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