Why Businesses Aren't Investing in the US: CEO

            

             The U.S. economy is still sluggish on its way of recovery from the great recession occurred during 2008-2009. Why? It is because the unemployment rate is still stubbornly remaining high at about 9 percent as compared to the low 5 percent before the great recession. How about Gross Domestic Production (GDP)? If unemployment has still not gotten back to where it was before the recession, should the GDP do the same, right? No, it is not. Indeed, the national real GDP growth rate has gotten back to where it was before the recession.  In first quarter of 2012, the real GDP increased 2.2%. One may wonder if GDP has gotten back to where it was before the recession, why the unemployment rate still could not do the same. There was an answer for such the question from an article written by Bruno Navarro of CNBC on Friday 27^th April 2012 called “Why Businesses Aren’t Investing in the US: CEO.”

            On the article, Mr. Bruno reports the discussion between a CNBC’s host Larry Kudlow and International Paper CEO John Faraci. Indeed, during the discussion, Mr. Faraci explained the reason why businesses are not investing in the US economy. According to him, businesses are not investing in the US economy because consumer spending has been slow thus creating no demand for businesses to open offices or factories here. As the result, no job is created; it is the reason why unemployment still could not drop. Also according to Mr. John, the real GDP has increased well because the country has been able to produce more with fewer employees. That is the reason why while GDP has recovered but unemployment rate has still not done so (Navarro, 2012).

            So, what does it means to Americans and the government? Indeed, the government should create some kind of mechanisms for people to spend increasingly without damaging their future consumption or wealth. One of those is tax. Lowering tax will leave more money for people to spend. Unfortunately, under Obama’s administration, the government has tried to increase tax. Another mechanism the government should do is to encourage population to grow. In fact, like other developed countries, U.S has low population growth rate. Without more people are on the economy, there would be no additional demand for products or services including housing market.  

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