The economic problem that could destroy America TODAY
FREE Catholic Classes
The economy is growing slowly, and the bad news comes at a time when the Federal Reserve is contemplating an interest rate hike. The combination of a sluggish economy and rising interest rates could lead to a recession.
Stagnant wages are a threat to our already weak economy. Fortunately, there's a positive trend as some employers begin hiking wages.
LOS ANGELES, CA (California Network) - The U.S. economy grew slowly this spring. According to the Commerce Department's measurement, growth was a sluggish 1.1 percent. This announcement comes at a time when the Federal Reserve is signaling its willingness to raise interest rates.
There is encouraging news. Consumer spending continues to rise as employers are starting to raise employee wages. Higher wages can trigger growth as more money means more spending.
In 2015, the economy grew at a respectable 2.6 percent last year. Wall Street continues to do very well, flirting with record highs.
Economists expect the economy will grow at a 2.5 percent pace, which is a good figure for modest growth. Such growth would justify a rate increase by the Federal Reserve. The Fed will raise interest rates when growth accelerates. Higher interest rates discourage inflation by keeping the economy from growing too fast. However, when the economy shrinks, or grows very slowly, the Fed will cut interest rates which encourages spending and a return to growth.
If the Fed makes the wrong move and raises rates during a time of contraction, or lowers rates during expansion, they will make the trend worse. Such mistakes can turn a recession into a depression, as happened in the Great Depression. Or, they can turn inflation into hyperinflation which makes money worthless.
At present, it seems the greatest problem facing America are the low wages paid to workers. Both the poor and middle class have suffered from stagnant wages and have not seen their purchasing power rise since 2001. In fact, increases in prices have outstripped increases in wages, causing both groups to lose purchasing power. Many consumers have attempted to cover these developing gaps in purchasing power with credit, leading to a glut of debt.
Either wages will need to rise to help workers cover the debt, or the debt could go bad, resulting in default. Defaults on debt can spark sudden collapses in the economy, as happened in the Great Recession of 2008. Some economists have warned of a repeat of 2008 on a deeper scale.
A final problem is the fact that small employers, often squeezed by larger competitors, such as WalMart in the retail sector, cannot afford to raise wages much. Large employers can easily do so, but small enterprises are struggling as much as middle class consumers.
The financial waters ahead are tricky, and a wrong move by the government or the Federal Reserve could turn potential growth into economic collapse.
The California Network is the Next Wave in delivery of information and entertainment on pop culture, social trends, lifestyle, entertainment, news, politics and economics. We are hyper-focused on one audience, YOU, the connected generation. JOIN US AS WE REDEFINE AND REVOLUTIONIZE THE EVER-CHANGING MEDIA LANDSCAPE.
Thirty plus years ago, the U.S. Catholic bishops wrote a very challenging pastoral letter titled "Economic Justice for All." In their ... continue reading
For the past 60 years, the Federal Reserve's yield curve has predicted recessions. Now, as the yield curve shows signs of inverting again, ... continue reading
Markets have suffered their worst April start since the Great Depression, led by Amazon which lost 5.21 percent of its value in one day ... continue reading
Global markets have dropped for the past few days, and just this morning have rebounded. It remains to be seen if the recovery is ... continue reading
The world is richer and more productive than ever before in history. Yet, income inequality is growing the poverty is on the rise. Middle ... continue reading
by Catholic Online
- Severely disabled French man taken off, returned to life support
- Protesting "Bans" Misses the Point - and the Victim
- Daily Reading for Thursday, May 23rd, 2019 HD Video
- St. Rita: Saint of the Day for Wednesday, May 22, 2019
- Pope Francis: Bishops who do not know their priests weaken the Church
- Daily Readings for Wednesday, May 22, 2019
- Prayer Requests Live for Tuesday, May 21st, 2019 HD Video
- Prayer Requests Live for Monday, May 20th, 2019 HD
- Prayer Requests Live for Monday, May 20th, 2019 HD
- Daily Reading for Wednesday, May 22nd, 2019 HD
- Daily Reading for Tuesday, May 21st, 2019 HD
Learn about Catholic world
Inform - Inspire - Ignite
Catholic Online Saints
Your saints explained
Catholic Online Prayers
Prayers for every need
Catholic Online Bible
Complete bible online
Catholic Online News
Your news Catholic eye
Today's bible reading
Products and services we offer
Catholic Online Shopping
Catholic medals, gifts & books
Advertise on Catholic Online
Your ads on catholic.org
Catholic Online Email
Email with Catholic feel
Learn the Catholic way
Catholic Online School
Free Catholic education for all
K-12 & Adult Education Classes
Support Free Education
Tax deductible support Free education
Copyright 2019 Catholic Online. All materials contained on this site, whether written, audible or visual are the exclusive property of Catholic Online and are protected under U.S. and International copyright laws, © Copyright 2019 Catholic Online. Any unauthorized use, without prior written consent of Catholic Online is strictly forbidden and prohibited.
Catholic Online is a Project of Your Catholic Voice Foundation, a Not-for-Profit Corporation. Your Catholic Voice Foundation has been granted a recognition of tax exemption under Section 501(c)(3) of the Internal Revenue Code. Federal Tax Identification Number: 81-0596847. Your gift is tax-deductible as allowed by law.