News

Election Year Politics Has Impact on US Economy

Politicians could be making the economic slowdown in the U.S. worse than it really is by constantly reminding voters that the economy needs fixing. This is the view of some analysts who say that because consumer spending is the primary engine that drives U.S. economic growth, negative messages during this election year cycle can have a dampening effect on the world's largest economy. VOA's Mil Arcega reports.

Rising unemployment, the housing downturn and stock market plunges have made the state of the economy the number one issue for voters -- replacing the Iraq war.

This has led presidential hopefuls from both the Democratic and Republican parties to work hard at convincing Americans that they have the knowledge, experience and wisdom to heal the ailing economy

Republican candidate John McCain said recently, "It's obviously important to stop the spending. As president I know how to do it."

Democratic candidate Barack Obama said, "We will once again lead the world, not just militarily but diplomatically, economically."

 Hilary Clinton, the leading Democratic candidate, said, "We've got to do something about this. And there's a big difference between talking and acting."

But some economists say all the talk about the economy -- especially the emphasis on the negative -- only serves to make matters worse.

Dan North is the chief economist at Euler Hermes, one of the largest credit insuring firms in the world. Hermes says, "When you get this relentless drum beat, which I've seen before in election years, it tends to make people pull their horns in a little bit because they do start worrying more about the economy."

And when people are worried, North says they tend to spend less. "Most of our economy is based on people spending - that is buying milk, buying cars, and suits and TVs, and that sort of thing. That's what drives our economy. Two thirds of our economy is driven by consumers. So if consumers stop spending because the economy is slowing, it's gonna be yet another drag on the economy itself."

Even financial markets are not immune. Tom Hertz, an economics professor at American University, says investors react in similar fashion to stock market psychology. He says what happens in U.S. markets often has a chilling effect on markets around the world. "Well, suppose you're a Japanese investor and you discover that there's something going wrong in the American market and you think it may or may not affect the Japanese market, well, just to be sure, you sell, right? So -- self-fulfilling prophecy - it does affect the Japanese market."

Any recovery of the slumping U.S. housing market may be similarly affected. Economists say fears that the U.S. economy may already be in a recession is causing some buyers to think twice before making any big purchases.

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs