Thursday, November 12, 2009

For some reason I haven't gotten the most recent Economist issue so I'm stuck from the October 13th-27th. Most of the large economies have been in a slump but it seems like many of them are starting to come up. Recent figures suggest that productivity in the US increased by 10%. I think that by 2010 the whole unemployment problem will be somewhat resolved with maybe 6 % unemployed and productivity will continue to rise.

However, the same cannot be said of the EU. The large majority of countries experienced declines in production. Particularly France, Italy, and Sweden are experiencing deflation and rising unemployment with no real signs of exiting this recession. So much for Welfare-State superiority. If they want to stimulate growth and end this recession, the EU cannot simply hope to keep their low interest rates. Some fiscal policy needs to be enacted, particularly a cut in taxes might do the EU some good. Consumption will go up in these nations and the people will start to see prices rise, unemployment drop, and wages will return to normal.