Chapter 5 - Economic Indicators

http://www.cbc.ca/canada/calgary/story/2009/02/06/januaryjobs.html

Summary:
The world economy is still staggering in recession and job losses are continuing to increase in Canada. On Friday, Statistics Canada said that the unemployment rate in January exceeded anything seen during previous economic turn downs in the 1980s and 1990s. In January, the unemployment rate has gone up to 7.2 percent with 129,000 job losses. Most of these jobs were full time positions. Countless economists describes this situation as “horrifying “and “shockingly poor”, since many of them only expected 40,000 job cuts. Many of the job losses were lost in the manufacturing sector. Within this sector, most job cuts were in the motor vehicle manufacturing. The production of furniture; computers and electronic appliances; components; and clothing also decreased in production which led to job losses.

Connection:
The connection between the article and the textbook is demand-deficient unemployment. Usually, when a product is selling well the companies will hire more workers. However, this is not happening right now in Canada. Due to the recession in the world’s economy, demands for numerous of products has declined. People are reluctant to spend their money thus it reduces sales for businesses. Since products aren’t selling well, employers do not need to hire workers. This results in unemployment. Job losses in January were mainly concentrated in the manufacturing sector. People’s demand in cars, clothing, and electronics are declining so companies will not need to produce as many goods. Therefore, employers don’t hire new employees and lay off workers because the consumers demand for their product is low.

Reflection:
The number of job losses in January has shocked many economists. This is caused by the decline in demand of goods by the consumer. Since the world's economy is in recession, everybody is finding ways to save as much money as they can. The article mentioned that the motor vehicle manufacturing sector is suffering significantly. Many employers from this industry are cutting jobs and salaries for people are not buying cars. I wonder how will the government intervene to stop this plunge in unemployment. I also question how long it will take for the world's economy to be out of this recession. Will it be as bad as the 1980s ? There are so many questions but the answers to those are all uncertain.