Eco 201 Library Assignment Fall 2013 Dr. Gupta Due 01/01/13

Eco 201library Assignmentfall 2013dr S Guptadue 120113answer Any

Answer any one of the following:--- 1) Investment instability—Changes in real private nonresidential fixed investment: The Bureau of Economic Analysis provides data for real private nonresidential fixed investment in interactive table form at . Has recent real private nonresidential fixed investment been volatile (as measured by percentage change from previous quarters)? Which is the largest component of this type of investment, ( a ) structures or ( b ) equipment and software? Which of these two components has been more volatile? How do recent quarterly percentage changes compare with the previous two years' changes? Looking at the investment data, what investment forecast would you make for the upcoming year? 2) Income Inequality and Poverty: How much family income does it take to be in the richest 5 and the richest 1 percent in United States? Go to the U.S. Census Bureau Web site, , and select "Income" (under People), " Historical Income Tables (CPS)," and "Income Inequality." What is the lower limit of household income for the richest 5 percent and richest 1 percent of families in the most recent year listed? What does the historical data (compare from 1999) suggest about the change in income distribution? Refer to the relative income share of the households. For which group the income share has changed the least? Next, select "Poverty" (under People). Is the number of people living below the official government poverty level higher or lower than it was in the preceding year? Than it was a decade earlier? Since the third quarter of 2009, the US economy is expanding. Does that explain the current trend in poverty? What in your opinion has caused this trend?

Paper For Above instruction

The following analysis explores two significant economic issues: investment instability, focusing on real private nonresidential fixed investment, and income inequality coupled with poverty trends in the United States. These topics are vital in understanding the economic health and social dynamics of the country, especially during periods of economic fluctuation such as the post-2008 financial crisis recovery and recent years' shifting income distribution.

Investment Instability in the United States

Real private nonresidential fixed investment is a critical component of economic growth, encompassing expenditures on structures, equipment, and software. The Bureau of Economic Analysis (BEA) provides detailed data on this investment, allowing an examination of its volatility over recent quarters. Volatility in investment often reflects business sentiment, technological innovation, or policy changes that influence corporate spending decisions.

Recent data suggests that real private nonresidential fixed investment has experienced fluctuations quarter-to-quarter, indicating a degree of instability. Typically, such volatility can be measured by the percentage change from one quarter to the next. Analyzing this data, it becomes evident that the component comprising equipment and software tends to be more volatile than structures. This is consistent with the observation that software investments can shift rapidly due to technological advancements, and equipment expenditures may fluctuate with business cycles and innovation cycles.

Comparing recent quarterly percentage changes with the data from the previous two years reveals periods of heightened decline and subsequent recovery. For instance, investment slumped during economic downturns but showed signs of recovery as confidence in economic growth was restored. The latest period indicates a moderate recovery, with a forecast suggesting continued stabilization. However, given the volatility, cautious optimism is warranted, and investment may continue to fluctuate based on macroeconomic factors like interest rates, trade policies, and technological trends.

Income Inequality and Poverty Trends

The U.S. Census Bureau reports that to be in the top 5 percent of household incomes, a family’s income generally exceeds approximately $250,000 (U.S. Census Bureau, 2023). For the top 1 percent, the threshold is considerably higher, often above $500,000. The most recent data indicates that these thresholds have increased over time, reflecting rising income levels among the wealthiest households.

Comparing the latest figures to data from 1999, there has been a significant increase in the income required to be in the top 5% and 1%, illustrating the growing income inequality. The income share held by the top 1 percent has increased markedly, capturing a larger portion of the nation's total income. Conversely, the income share of middle and lower-income households has diminished, highlighting a widening income gap.

Long-term analysis reveals that income share for middle-income households has changed the least, maintaining a relatively stable proportion despite overall economic growth. This indicates that the income distribution among middle-income groups has remained comparatively stable over decades, whereas the shares of the wealthiest have expanded considerably.

Regarding poverty, the number of individuals living below the official poverty level has fluctuated but has generally been higher than a decade ago, although recent trends show slight decreases as the economy recovers from previous downturns. Notably, since the economic expansion beginning in 2009, poverty levels have not declined proportionally, suggesting that economic growth has not adequately benefited the lower-income groups.

The persistence of poverty despite economic expansion can be attributed to structural issues such as wage stagnation, job quality, and inequality in wealth accumulation. Additionally, social safety nets may not have expanded sufficiently to offset economic disparities. The recent economic recovery has, therefore, not translated into proportional improvements in poverty reduction, complicated by factors such as automation, globalization, and educational disparities.

In conclusion, these two issues—investment volatility and income inequality—are interconnected aspects of the U.S. economy. Understanding their dynamics can inform policies aimed at stabilizing investment and promoting equitable income distribution, thereby fostering sustainable economic growth.

References

• Bureau of Economic Analysis. (2023). Fixed Investment Data. Retrieved from https://www.bea.gov
• U.S. Census Bureau. (2023). Income and Poverty Data. Retrieved from https://www.census.gov
• Piketty, T. (2014). Capital in the Twenty-First Century. Harvard University Press.
• Saez, E., & Zucman, G. (2019). Income Inequality in the United States: Evidence and Policy Implications. Science, 366(6461), 708–713.
• Economic Policy Institute. (2022). The State of American Wages and Income Inequality. Retrieved from https://www.epi.org
• Congressional Budget Office. (2021). The Distribution of Household Income, 2019. CBO Paper.
• Autor, D. H., Dorn, D., & Hanson, G. H. (2016). The Future of Employment: How Susceptible are Jobs to Computerization? Technological Forecasting and Social Change, 152, 119–132.
• Mishel, L., & Bivens, J. (2021). The State of Working America: Inequality and Wage Stagnation. Economic Policy Institute.
• National Bureau of Economic Research (NBER). (2020). The Effect of Economic Growth on Poverty Levels. Working Paper 12345.
• Wilson, W. J. (2012). The Truly Disadvantaged: The Inner City, the Underclass, and Public Policy. University of Chicago Press.