Question

I need to write 200 words about Consumption and Investment During COVID-19

First, use the chapter Basic Macroeconomic relations.

Second use the two resources 1.U.S. consumer spending appears to slow in August: This CNBC article notes that “core” retail sales (which include all the things bought by consumers except highly volatile automobiles and gasoline) declined .1% in August compared to July It suggests reasons why the economy may be losing steam after huge increases in consumer spending in May and June.

2.Capital Spending Plays Catch-Up For Now: The Wall Street Journal article reports that business investment (or “demand for non-defense capital goods except aircraft”) rose .4% in August and now above the level it reached in January, before the COVID crisis. Despite the pandemic, the article cites reasons why companies are stepping up capital spending plans.

Third Economists differ on the meaning of theses recent figures. Is the economy on its way back up after hibernating since February or is this the beginning of another economic slowdown? For this paper assignment, I would like your opinion on this question. Review the above articles (contained in the “Chapter 10 Reading . with respect to the following:

1. How do you feel the U.S. economy is doing? Do you feel it is cooling off after a slight rebound or will it continue to get stronger? What examples can you share to support your thinking? As part of your argument, cite at least one outside article, news report, etc. and incorporate it into your paper. Format your reference similar to the format described in the Discussion Board rubric.
2. Find the actual government data used for the above articles on consumption and investment. Hyperlink and write out the sources of the data in your paper.
3. Have you (or someone you know) significantly changed your spending habits during the pandemic? What specifically changed? Give examples, be it higher or lower, and include any marginal analysis you (or someone you know) may have used on deciding to make these changes.

I need all the above instructions in 200 words, and please do not write with hand writing.

Answer 1

Consumption as well as all forms of investment affect economic growth, with FDIs having a particularly important role. In most countries, there is a positive correlation between investment and GDP growth.In addition, it also affects the insufficient efficiency of investments. The pandemic Covid -19 has changed neraly every aspect of our daily lives , and government is no exception . Generally , spending is down across all industries , as lockdown measures have restricted what we can spend money on, due to resturants and shop being shut and air travel suspended. time spent indoors however , has caused spending confined the micro level. This is indeed true that , consumption expenditure increases this leads to an increase in investment of capital goods , in order to produce more consumer goods

The reason of U.S. consumer spending slow in august is that the consumer as unable to generate income in the lockdown phase , however the income which is generated is to be spent on necessary items (i.e.highly volatile automobiles and gasoline ) . Consumer are rational , when they observe their is no liquidity in market , they start saving.

Despite pandemic companies are stepping up capital spending, since to accelerate the economy and spending capital helps the company to acquire or maintain long term business assets. Capital investements generate so as to guage their economic value .

The US economy is officially is recession . Economists said that the recession is unusual , but they hope that it could end quickly. The few instances is that its added 1.8 million jobs in july , one of the highest one - month record. American"s spending on household expenses , including housing , healthcare , transportation and recreation , plinged in the early weeks of pandemic