Journal opinion artical - Essay Example

Sur Supervisor Journal Opinion Article Article: “U.S. Economy Begins to Hit Growth Stride” from Wall Street Journal Mitchell and Shah (2013) argue in the above titled article published in Wall Street Journal that the US economy appears to be on a definite recovery path. Even consumer spending registered 2% annual growth rate up from the previous estimated figure of 1.4%. There is an overall increase in business and manufacturing activities across wide ranging fields. Though it is too early to say whether much of the growth in economy is real or it is simply due to piling up of the goods by the companies in anticipation of likely buoyancy in the markets.

The Dow Jones has crossed previous high of 16186.39 registered in January 2000 when adjusted for inflation during this period. That is very much evident from the following graphic. Source: http://online.wsj.com/news/articles/SB10001424052702304367204579270003162012122 Jeff Immelt, the CEO of General Electric Co., says that this time the US economy shows some robust recovery when seen in the context of commercial credit demand improvements. Moreover, the companies have begun investing in their core activities that is apparent from the increased business spending up to 4.8 percent. As per the authors, the 10-year US Treasury yield can provide a good clue about the possible economic recovery that touched 3% last week.

The recovery has failed to maintain its upward momentum several times since 2009; hence, the question can be raised whether this recovery is real or will succumb again. Richard Moody, the Chief Economist of Regions Financial Corp., also raises the same question; however, he utters a more optimistic note this time. The authors raise a pertinent question whether economy of the US is truly on a recovery path. They quote the Federal Reserve is also positive on the recovery this time. The Fed is serious about tapering its bond-buying program that is already in operation for the last several years.

The confidence stems from the momentum noticed in consumer spending that constitutes two-thirds of the US economic demand. Similarly, in the last few quarters, the job market has shown significant amount of buoyancy and that is sufficient to prove that the US economy is on a recovery path. Those who faced full or partial unemployment during depressed economic periods have been now getting fresh employment opportunities in myriads of fields. Equity valuations are surging ahead in the stock market that reveals confidence of the investors for new investment trends in the economy.

Housing valuations that reached to its lowest during 2009 and continued to remain bearish have now begun recovery showing upward trends for at least last one year or so. Many economists see that income of the people in the US is almost stagnant during this recovery and that is due to huge unemployment rate that is currently prevailing at 7%. That means almost 10.9 million people are still unemployed. It is a fact that some quality, high-wage jobs are being created at rapid rates and that is what driving the consumer sector.

Wage increase will follow automatically once demand of the goods and services in the economy shoots up. Auto and home sales are the two major sectors of the economy that will play a pivotal role in bringing economy out of depression. A large section of the businesses are revamping their production facilities and going ahead in full swing for capital investment in anticipation of the increased demand in year 2014 and that is certainly a positive sign being witnessed across a large section of the economy.

The authors argue that capital investment to the tune of $3.6 billion by Union Pacific Corp. constituting 16% of the company's revenue is a glaring example of the changing perceptions by business experts. Auto industry is leading the economic recovery that is being witnessed across most part of the US. According to Rob Knight, the chief financial officer of the Omaha, Union Pacific is embarking on a project to create facility on a 2200-acre rail facility in New Mexico that will cost the company around $400 million.

Not only this but also the company is planning to spend considerable earnings continuously for several years in a row. Similarly, as informed by Dave Anderson, the chief financial officer of Honeywell International Inc., the company is also planning to increase its capital expenditure by 30% in year 2014 putting aside pessimism that prevailed during last several years – after economic downslide. Accordingly, the likely investment by Honeywell will be to the tune of $1.2 billion. The point is that the companies are now responding to the changing tones that are now visible in a much clearer way in their industrial production and investment programs and the authors, in this article, have rightly proclaimed that the economy in the US is now changing its gear and accelerating its pace for a better time in the coming days.

Works-Cited Mitchell, Josh; Shah, Neil. “U.S. Economy Begins to Hit Growth Stride”. Web. 20 Dec. 2013.