Econ110BW11 - Lec11 A - GR_ol (1)

Econ110BW11 - Lec11 A - GR_ol (1) - Macroeconomics B Econ...

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Macroeconomics B Econ 110B–Winter 2011 Prof. Giacomo Rondina Lecture 11
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Expectations: Consumption and Investment Consumption , tt L t t CC W Y T ++ ⎛⎞ =− ⎜⎟ ⎝⎠ Investment ( ) , e t II V Π t Y Π=Π + + t t K + 2 Expectations, Consumption and Investment (Ch. 16)
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U.S. Economy Grew at 3.2% Rate in the 4th Quarter (NYT) With a little more money in their wallets and a little less fear in their hearts, American consumers helped pull the economy up by its bootstraps in the final months of last year. t Y The gross domestic product , a broad measure of the goods and services produced in the country, grew at an annual rate of 3.2 percent in the fourth quarter, up from 2.6 percent the previous period according to Commerce Department port released Friday in the previous period, according to a Commerce Department report released Friday. Thanks to modestly higher paychecks and swelled investment portfolios, Americans appeared more comfortable buying again and stashing away a little less in savings. Consumer spending grew at an annual rate of 4.4 percent in the October December period, its quickest pace in nearly five years and almost double the growth rate from the previous quarter. e payroll tax cut and the extension of the ush ra tax cuts both passed in December The payroll tax cut and the extension of the Bush era tax cuts , both passed in December, are expected to further buoy consumer spending, which many economists predict will grow at an annual pace of about 3 or 3.5 percent this year. Businesses also increased their spending on equipment and software as the year concluded, though not quite at the double digit growth rates shown earlier in the year. “Firms have the cash to hire,” said Augustine Faucher , director of macroeconomics at oody’s nalytics. “They just need the confidence to do so, and that could develop 3 Expectations, Output and Policy (Ch. 17) Moody s Analytics. They just need the confidence to do so, and that could develop quickly.”
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U.S. Economy Grew at 3.2% Rate in the 4th Quarter (NYT) With a little more money in their wallets and a little less fear in their hearts, American consumers helped pull the economy up by its bootstraps in the final months of last year. The gross domestic product , a broad measure of the goods and services produced in the country, grew at an annual rate of 3.2 percent in the fourth quarter, up from 2.6 percent the previous period according to Commerce Department port released Friday t C in the previous period, according to a Commerce Department report released Friday. Thanks to modestly higher paychecks and swelled investment portfolios, Americans appeared more comfortable buying again and stashing away a little less in savings. Consumer spending grew at an annual rate of 4.4 percent in the October December period, its quickest pace in nearly five years and almost double the growth rate from the previous quarter.
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Econ110BW11 - Lec11 A - GR_ol (1) - Macroeconomics B Econ...

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