Consumer Confidence
Economic Slowdown and Consumer Confidence
Introduction
Economic slowdown refers to an incidence where the rate of economic growth under the banner of the gross domestic product experiences a slump. The decline in the rate of economic growth, however, does not serve as a pointer of decline but rather, the economy growing at a slower pace compared to the previous periods. On the other hand, consumer confidence is the hope that the populace has that stabilization of the economy is set to guarantee them jobs, better healthcare, and the provision of the essential services. Therefore, there is a direct relationship that exists between economic downturn and consumer confidence. Often, the relationship between economic slowdown and consumer confidence is inversely proportional in perfect markets but unpredictable in economies where government interference is high. This paper aims to discuss the concept of economic and consumer meltdown in light of an article from the Wall Street Journal.
Issues at Hand
The article What Slowdown? Chinese Consumer Confidence Still Strong by Talley Ian presents a vast array of economic issues within China (Talley, 2016). To delve on the issues that are presently at hand, there is the need to discuss the contents and key points that are identified by the author of the article. The article mainly focuses on the consumer confidence that is generally driven by the Chinese populace. As such, the author of the article points out that job security is a guarantee to the Chinese workforce thus no need for the citizens of the country to worry about their work. Furthermore, people only have to concentrate on how they are set to balance their job and family and address the health issues that are likely to arise.
The economic aspects that are discussed in the article are solely viewed under the radar of the Chinese government. It is working with sleuth and dictatorial tendency to ensure that the image of the Chinese economy is shown to the world in a positive manner. One of the measures that have been presented by the countrys government is the sanctioning of the media on the negative reports regarding the curves of the economy of China. Second, the Chinese government uses an experiential model that assures the populace that the economic growth that currently stands at 7% is sufficient to guarantee jobs and provision of health services (Talley, 2016). China is one of the strongest economies in the Asian region and a major rival to the American economy and the European Union. What mainly stands out in the article is that the government plays a significant role in determining how the economy runs and operates. The strategy of the Chinese government is unlike that of other leading economies such as the European Union where the market players set the market dictates that run and steer economic growth.
Connection between the Article and Economic Tools
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Economic tools refer to the measures, concepts, principles and the schools of thought that the economists use to premise their economic analyzes. Thus, there is the need for one to delve more on the connection that the article has with the economic tools. All the economic tools are qualitative. As such, they can either be historical, empirical or theoretical. The economic tool that has a connection with the article is empirical investigation. The specific economic tool that has been used in the article is the time series data. The time series is the presentation of the findings of the economic performance within a given period of time. Often, the data that is presented is usually keyed in a graph or table to facilitate economic analysis.
Analysis of the Article
To analyze the article in light of the time series data, there is the need to get an understanding of the data that is presented in the graph attached to the article. The graph is attached below.
Figure 1. The plotting of the value presented based on the Commodity Channel Index
From the graph, the plotting of the value is presented based on the Commodity Channel Index. Commodity Channel index measures the performance of the prices of the commodities against the average that are postulated by the economy of a given region or country. The presentation of the commodity channel index is often given either a positive or a negative value depending on the data that is found from the time series data that is collected by the economic analysts. The positive indicator means that the economic performance of the selected commodities is above average, and a negative value would mean that the economic performance of the selected commodities is below average.
Furthermore, the negative or positive value of the commodity channel index has a direct relation to the consumer confidence. When the commodity channel index is negative, then there is no consumer confidence in the economy; and when the commodity channel index is positive, there is consumer confidence in the performance of the economy. The recording of the consumer channel index, based on the trend from a line graph that can be plotted on the highest values attained per given period can help in the establishment of a decline, stabilization or increase in the consumer commodity index across time.
From the graph that is presented above, the values of the consumer commodity indexes are almost equal for the period 2010 to 2015 (Talley, 2016). As such, the consumer confidence of the Chinese economy remains unshaken over the last five years. Though it is evident from the article that the economic growth of China has taken a slump from the double-digit growth to a 6-7% growth, the consumer confidence is maintained (Talley, 2016).
Conclusion
In conclusion, the time series data is the empirical research economic tool that the economists use to postulate the impact that the economy can have on the populace. The consumer confidence, however, does not affirm nor refute the economic growth that is being witnessed by an economy. The rise of an economy is often subject to the players identifying the prices of the commodities that are set and the buying power of the citizenry to afford the prices in the market. Economic slump down, on the other hand, means that there is still economic growth that is being witnessed in the economy. However, the rate of economic growth could not be commensurate with the rate of economic growth that was witnessed within the previous period. The determination of the consumer confidence can thus be best analyzed through the critical analysis of the data that is presented through the time data of the consumer commodity index. Where there is a decrease in the value of the consumer commodity index, there is a reduction in the consumer confidence. Where there is a constant value in the consumer commodity index, there is no change in the consumer confidence during the given period. Third, where there is an increase in the consumer commodity index, there is an increase in the consumer confidence regarding the rate of their economic performance. Concisely, from the article and the graph presented, the economic meltdown in China has no impact on the consumer confidence.
