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Economic problems and employment in USA

The current economic recession in the USA has created much discussion concerning the relationship that exists between economic growth and employment the U. S. Although the rate of unemployment is considered by a lot of people as the lagging barometer, however, some people disagree whether employment is a lagging economic barometer or a coincident. For instance, during early 90s, the rate of unemployment went up for nearly one year though the recession had ended. Various writers have approximated employment elasticities (an assessment of the relationship between economic growth and employment), for different nations (Boltho and Glyn, 1995).

According to Padalino and Vivarelli (1997) there is considerable variations in employment elasticities among nations, they approximated that the U. S employment elasticity is 0. 5. The measure of elasticity provides an understanding of the manner of the relationship that exists between economic growth and employment. The measure of elasticity suggests that even though economic growth offers a momentum to employment, at times, employment growth might take on its own impetus, in way that times of low employment growth are again followed by further times of low employment growth.

For instance, at the start of economic recovery, during the time when the economy begins to grow, thereby providing a drive to employment, the employment growth might still lag behind. This aspect partially explains way in 2003 when the economy was recovering; there was a poor employment growth. The elasticity measure also provides further understanding into this relationship. Accordingly, it is certain that economic growth provides a positive and important effect on employment growth; however some of these effects take a long time to be totally felt.

Therefore economic growth might have to happen for some time before its impact can be noticed on employment rate. The moment employment rate starts to go up; it takes on its own drive. The moment this happens, the combination of these two aspects, economic growth as well as employment persistence ought to end up in a more significant and sustainable gains in employment rate. Examples of some companies that bankrupted in United States The current financial crisis in America have seen a number of corporate giants falling, this section discuss a few of them

Washington Mutual (September, 2008) As DeSilver (2008) narrates, American people on 26, September, 2008 woke to the sad new of WaMu (Washington Mutual) bankruptcy. This was one of the largest bank collapses in history of America. WaMu came to indicate the extremes of mortgage boom. Indeed, it is a big surprise that a bank with assets worth $307 billion could collapse. Lehman Brothers Holding Inc (September, 2008) On September, 15 of 2008, another financial giant, Lehman Brothers Holding Inc.

with a history of 158 years in operation and with estimated $638 billions worth of asserts filled for bankruptcy. The bank was riddled by bad debts and saw its share slump by 94% over a period of 12 months. It’s Barclays Plc that acquired Lehman (TheStreet. com, 2008). Refco Inc (October, 2005) Founded in 1969, Refco was a big financial organization that had diversified its financial services. As Hassan (2008) notes, Refco Inc. bankruptcy in 2005 was then seen as a major bankruptcy case as the company had over $4 billons from its customers.Strangely, the company collapsed only after ten weeks of being offered to the public.

Reference:

Boltho, Aand Glyn, A (1995): Can Macroeconomic Policies Raise Employment: International Labour Review 134: 451-470 DeSilver, D (2008): Feds seize WaMu in nation’s largest bank failure: Seattle Times (September, 26) Goodman, P and Morgenson, G (2008): By Saying Yes, WaMu Built Empire on Shaky Loans”. New York Times: pp. A1 (December, 27) Hassan A (2008): Some Major U. S. Companies That Went Bankrupt: Business Journal http://www.

dirjournal. com/business-journal/some-major-us-companies-that-went-bankrupt/ Padalino, S and Vivarelli, M (1997): The Employment Intensity ofEconomic Growth in the G-7 Countries: International Labour Review 136: 191-213. Sidel, R; Enrich, D and Fitzpatrick, D (2008): WaMu Is Seized, Sold Off to J. P. Morgan, In Largest Failure in U. S. Banking History: The Wall Street Journal (September, 26) TheStreet. com (2008): Lehman files for Chapter 11 bankruptcy, TheStreet. com, (September 15, 2008)