Economic Critique - Consumer Income

Economic Critique

         We are looking into our economic state; this can be just like going on a rollercoaster ride. The United States economy has gone up and down over the years we have been in a recession. The research we have gathered to portray key factors in improving our economy is through aggregate demand and supply. We will identify a few economic factors that influence that states of the economy are consumer income, expectations, and interest rate and the fiscal policy.  

Consumer Income

Consumer income is defined as the amount of income remaining after taxes and living expenses have been deducted from ones earnings (Business Dictionary, 2015). Simply put, consumer income is the amount of money that one has to spend, save and invest as they choose. There are numerous factors that affected consumer income during the current economic recession. Despite the fact that the stock market has more than doubled since the Federal Reserve started its quantitative easing program in 2008 real consumer income is still below 2008 levels. In terms of dollars, the median annual income is 4.5% lower than it was in January seven years ago (Short, 2015). Combine that with the high unemployment rates, high portions of student loan debt, and a large percentage of the country relying on federal assistance programs and it is easy to see that consumer income is minimal for many Americans. While we have seen some improvement concerning personal income this year it doesn’t mean that consumers are spending. The opposite is actually proving to be true as most consumers are choosing to save their money. While consumers choose to be fiscally responsible, which is great for the long term, spending is necessary to give our economy the real boost that it needs (La Monica, 2015).

Expectations

        In today’s economy, many Americans are concerned that a recession rebound is possible but many years away from happening.  However, unlike the last recession we now live in an era where more information is readily available which can either have a positive or negative effect on communities. Numerous sources of information will either have individuals worrying less or more. While hopes and expectations point towards the ideal that a new Presidential administration will help improve the current state of our economy, some may still be unsure of that fact. For some, expectations for a brighter future are not as high due to the fact that Americans are still experiencing home foreclosures, job layoffs, bankruptcies, and an increase in individuals needing public assistance.  The average American still worries about financial stability and other economic factors. Expectations seem hopeful but not overly optimistic, as many families still struggle to pay bills, continue live paycheck to paycheck, and are forced with choices such as buying groceries or a needed medication (Censky, 2012).