LAYOFFS IN THE CONTEMPORARY AMERICAN ECONOMY

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LAYOFFS IN THE CONTEMPORARY AMERICAN ECONOMY

This worry translates into weak consumer confidence, and weak consumer confidence, in turn, dampens the propensity of consumers to spend, which, in turn, restrains demand that, in turn, causes manufacturers to be hesitant in restoring jobs lost in the recent recessioneven if they compete effectively and are not casting longing glances at low cost Mexican labor. The United States is beset by staggering international trade deficits, a critical dependence on foreign energy supplies, and a fear that it will, over the coming 50 years, be excluded from a leading role in the international economy (Thompson, 1990, pp. 2529). Many of the goals of the Bush Administration, while they derive from these imperatives, will not likely be clearly stated for the American people, but will, rather, be clouded in deceptive rhetoric.

With little doubt, the Bush Administration looks to a North American free trade agreement as the Reagan Administration viewed the CanadaUnited States Free Trade Agreementa way out of the country's international trade deficit. The Reagan Administration hopes were dashed to a great extent because one result of the Agreement was not a combination of a massive increase in American exports to Canada, together with a reduction in Canadian exports to the United States. Because of the lower wage rates and lower taxation levels in the United States, Canadian firms in larg

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e numbers have either relocated to the United States or they have established production facilities in the United States, while American firms have, also in large numbers, either closed down or scaled down their Canadian operations. One result of these actions have been a reduction in the level of Canadian exports to the United States. Unfortunately, the resulting loss of jobs in Canada has dampened Canadian demand for American products. Therefore, to date, the CanadianUnited States Free Trade Agreement has had a relatively neutral impact on the American economy, while it has had a detrimental impact on the Canadian economy.

and the American economy will be saddled with increased welfare and dislocation costs.

Based on the latest surveys of consumer confidence, the most optimistic GNP (gross national product) projections for 1992 call for an increase in personal consumption expenditures of 4.5 percent over 1991. The most optimistic projections also call for an increase in gross domestic investment in 1992 of approximately 10 percent. With mortgage interest rates already on the rise again in mid1992, and with business enterprises holding off on investment in the wake of continuing weak consumer demand, it now appears that gross domestic investment will not increase to the extent usually anticipated in a recovery year. In view of the fact that 1992 is an election year and that if the American economy does not exhibit signs of a strong recovery by summer, it may be anticipated that the Bush Administration, regardless of its protestations to the contrary at the present time, will increase governmental spending dramatically, and that the Democratcontrolled Congress will cooperate with the Administration. While the Democrats will not want to help President Bush, neither will they want to be seen as a drag on economic recovery. Thus, it may be anticipated that governmental purchases in 1992 will increase by some sixpercent over 1991 levels. This increa

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		Bush Administration \| President Bush \| Barlett Steele \| Agreement Based \| Johnson Administrations \| KennedyJohnson Administrations \| Europeans Japanese \| Trade Agreement \| Reagan Administration \| Western Hemisphere \| american economy \| free trade \| free trade agreement \| trade agreement \| bush administration \| american firms \| jobs lost \| consumer confidence \| weak consumer \| north american \| reagan bush \| cut taxes financed \| administrations cut taxes \| gross domestic investment \| weak consumer confidence \|