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Economic Review

6/22/09

Despite the implications of increased unemployment on derailing an economic rebound, US corporations continue to send jobs overseas.

Given all the printing of US$s, issuing of Tarp monies and government bailouts, there are a number of pundits that are sounding the bells of an economic recovery that may transpire within the next few quarters.  One tangible factor that may derail this positive scenario however is the continued rise in joblessness for US workers as decreased consumption and clogged credit markets have thwarted economic growth. 

Increased unemployment poses a particular threat to the beleaguered real estate market as declining and in some cases evaporating incomes are resulting in increased foreclosures in the prime sector.  Despite the critical nature in US joblessness however, some US corporations are continuing to ship operations to low wage economic zones and therefore reducing US based employment.  The reason for the continued controversial activity disguised in the realm of globalization is to increase profits and incomes for a few corporate leaders.

The US economy remains in a fragile state, where increased unemployment rattles its core. Yes, global trade can continue, however the US has to recognize the need to stabilize employment for its domestic work force.  Manufacturing and service activities can be carried out by domestic US operations and goods and services produced can be traded on the global market.  The idea that US companies have to reduce their presence in the US and invest in operations in low wage zones is one of the factors that has made the US economy more fragile in light of the financial turbulence currently transpiring.  GM needed to be bailed out by the US government as demand in the domestic market declined, yet GM operations in China are doing quite well.  Why can’t GM simply create cars in US factories, created by US workers and trade them abroad.

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