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Economics Is The U.S. Really Recovering Faster Term Paper

Economics Is the U.S. really recovering faster than the EEC and Japan-Asian trading partners?

The economic climate improved for all during the second half of 2003. However, the U.S. recorded a more accelerated upturn during this period that many attribute to extensive tax cuts. Expansion in private consumption has been dramatic and business spending has also increased recently.

Japan's economy grew for a seventh quarter in Q3, 2003 the longest expansionary phase since 1997. Real growth came in at +.6% q/q, double the forecast. The economy expanded by 2.7%. In 2003, driven by exports and private capital investment. However, deflation is set to continue, albeit at a lower pace, and the general government deficit is expected to exceed 7% of GDP for the next two years.

The performance of the Western European economy was weaker. After a prolonged phase of stagnation, signs of a gradual economic recovery became visible in the second half of 2003. Exports increased despite the appreciation of the euro, but internal demand remained weak.

Organization for...

And E.E.U. For 3-4th Q. 2003, and the year 2004?
In the E.E.U., inflation was sluggish in Q3 and Q4, 2003, buoyed up by temporary factors such as oil price increases, weather-induced food price hikes and rises in indirect taxes. Compared to 2.3% in 2002, headline inflation is expected to remain at 2.1% on average in the euro area in 2003, before falling slightly to 2% in 2004. Core inflation was also low during 2003 as a result of sluggish productivity growth and the slow pass-through of the effects of the euro appreciation into production and consumer prices. However, the reduction in unit labor costs, as labor productivity picks up, and wage moderation are expected to lead to a fall in core inflation in 2004.

In the United States, inflationary pressures are clearly starting to mount, but this is after a significant bottoming out.…

Sources used in this document:
Historically, GDP has increased in wealthy countries through productivity increases. Conversely, countries with a low productivity increase are among the poorest in the world.

Productivity differentials are the main cause of dispersion of per-capita income. Higher productivity first impacts profits. These profits are the basic source of increases in real wages and living standards. If production costs are not greater than increase in productivity, unit cost of production will be lower, opening the possibility for price decreases that will increase international competitiveness. Productivity growth is also an anti-inflationary force in that it offsets increases in nominal wages.

As evidence of the importance of productivity, researchers have estimated that about one-half of the productivity growth over the 1959-98 period was due to increases in the quantity of capital. The other half was due to increases in labor quality and improvements in efficiency.
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