Since 2009, the private sector has been a source of hope and relief for the U.S. economy. Business investment boosted the original rebound; so much so that many began to consider corporate America to be the key to keeping the economy alive.
However, the situation is headed for a major change. In the past, businesses were able to thrive off of overseas profits. Forester Capital Management’s Thomas H. Forester pointed out that “you saw the dollar deteriorate, which was a tail wind for earnings,” from 2009 until last year.
Now, the dollar is up significantly against the Euro, climbing rapidly since last year. Forester explained: “That means the tail wind has turned into a headwind, and you have to start relying on consumption again.”
Since Europe is grappling with a recession and China’s economy is faltering, few are left to boost consumption other than the domestic consumers themselves.
Representative Jesse L. Jackson is one of many who agree with this assessment. In fact, he suggests raising the minimum wage in order to bolster spending and consumption.
During a news conference on Capitol Hill, Jackson explained that the economy would benefit from a rise in “the purchasing power of millions of low-income and low-wage workers, and one proven and effective way of doing that is to raise the federal minimum wage.”
Jackson’s motion would also subtly address the bitterness that has arisen throughout the crisis as a result of income inequality.
“We’ve bailed out banks, we’ve bailed out corporations, we’ve bailed out Wall Street, we’ve tried to create sound fundamentals in the economy,” Jackson said. “Now it’s time to bail out working people who work hard every day and they still only make $7.25. The only way to do that is to raise the minimum wage.”
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