Macroeconomics
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Rates 'to stay at 0.5% this year'

Rates 'to stay at 0.5% this year' | Macroeconomics | Scoop.it
UK interest rates are unlikely to rise this year, according to a snapshot of views of top economists from the BBC.
Fola's insight:

Interests rates are expected to still be 0.5% at the end of 2014, due to the Bank of England saying that the unemployment rate has to reach 7% (currently 7.4%) until it consideres raising interest rates. However recent rises in house prices could force the Bank of England to raise rates sometime in 2014, just to slighty decrease the rate of rising house prices

 

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China's home price rises speed up

China's home price rises speed up | Macroeconomics | Scoop.it

"China's four major cities see record rise in new home prices in September, stoking fears of a housing bubble..."

Fola's insight:

Increasing house prices tend to have a positive effect on the economy. This has an increase on consumer spending as people feel a lot wealthier due to an increase in prices of their houses, so they are happy to spend more money - the wealth effect

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China Economy Rebounds In Third Quarter

China Economy Rebounds In Third Quarter | Macroeconomics | Scoop.it

"Stimulus is credited for arresting the decline in GDP growth as the Beijing leadership prepares an overhaul of its strategy..."

Fola's insight:

There has been an increase in government spending (a component of Aggregate Demand) meaning an increase in the economy. It has increased due to higher spending on railway construction and other public works - creating more jobs and generating more money into the economy.

 

However this may not last long as the economic growth really depends on government spending as there is weak global demand (less exports) and weak Chinese consumer spending - both also components of AD

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House prices 'rose by 8.4% in 2013'

House prices 'rose by 8.4% in 2013' | Macroeconomics | Scoop.it
UK house prices rose by 8.4% in 2013 as the economy started to gain momentum, according to the Nationwide Building Society.
Fola's insight:

Supply for houses has not kept up with the high demand, therefore there is a general increase in price. This could have a positive impact on the UK economy - people have an increase in perceived wealth (wealth effect) due to the rise in price of their house, people are more willing to spend - on an AD curve it would shift outwards with an increase in consumer spending

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Inflation, unemployment and UK 'misery'

Inflation, unemployment and UK 'misery' | Macroeconomics | Scoop.it

"The continued squeeze in wages is a reminder of how far the UK still has to go before the recovery feels more like one..."

Fola's insight:

Generally the poor inflation and unemployment results have a negative impact on the UK economy. With unemployment rates still relatively high, there will be a lack of consumer spending as some people don't receive an income, so they will have little money to spend. The high inflation rates tend to cause people to not know what is a fair price for a product, in addition people feel that they are worse off, even if their incomes rise by more than the rate of inflation - this could cause a decrease in rate of consumer spending

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