Every single detail affecting the growth of a country is being observed by the very keen eyes of an economist. The issue that may pose advantage or disadvantage to a country is being analyzed by those people whom we call “technical experts” of the field. Any economist would agree that it is of a prime issue in the society that state tax revenues are slowly declining.
In the article titled “Housing Slump Pinches States in Pocketbook” written by Abby Goodnaugh, it was clearly stated that one of the prevailing problems in almost any country in the world is the slow and even deteriorating condition of the tax revenue collections. It highlighted in the same article that one of the reasons why there has been a sluggish revenue collection by the government is that they are also undergoing a house market slowdown especially in Florida.
It has also been said that the projections for this year may be cut short as the housing industry experiences a slump. As stated in the article, the new home sales have dropped in February to the rate which is considered the lowest in seven years. Some people who availed of housing loans during the real estate boom has failed to use the money in acquiring property and instead diverted the same into buying luxurious cars and other expensive items. It also stated that one of the primary reasons why people opted to acquire property exclusive of real estate is because Florida has been experiencing a series of hurricanes which causes great damages to property and leaving owners at a great loss. To some of the real estate owners, investing on houses would instead comprise a liability to them. However, analysts say that the phenomenon – of having a sluggish house market — is said to be a recurring cycle. The scenario would never be a stagnant one, meaning the country would forever be enduring the problem — but instead it is to be considered a cycle in which any economy must go through.
Moreover, the economists are still crossing their fingers, hoping that the current condition of Florida would become better in the coming years.
Dealing with the ins and outs of the housing sector is important because it primarily detects how a nation would be getting money in order to provide the people its basic needs. The housing sector is one of the vital determinants whether the economic status of the country is said to be in good shape. As far as we know, the local property taxes being levied on real estate property forms part of the country’s gross domestic product.
To fully understand how the housing sector affects the economy, let us illustrate it by saying actual figures to back up the premise. In reality, the housing sector accounts for only about 6% of GDP, but has recently been a much more important component of growth, contributing 0.5% directly to GDP growth in the last two years (~U.S.$60 billion/year) and on the average adding 30,000 new jobs monthly in 2005. Some estimates suggest that wealth (home prices) and liquidity (home equity extraction) effects may have added up to 1.5% to GDP growth in the last few years.
Macroeconomists would most likely tell that there are certain repercussions should there be a slow or rather a decline in the collection of state tax revenues. The state tax revenue, to be fully understood, is the sources of income that a government collects and receives into its treasury and appropriates for the payment of its expenses. Without the much need tax collection, it is expected that the country would not be able to perform.
The online reference of the New York Times has employed a normative perspective in presenting its article. By way of a normative perspective, it means that there exists a certain norm from which information are based. To further illustrate, it has been said that normative perspective assumes that administrative processes are simply part of the whole network of processes that constitute the government. It also means reflecting fundamental values and stated goals for “state action.” In effect, it is said that shared expectations of a consensus is the best possible way to administer agencies, and that is meets with the ideals of fairness and justice.
The use of the normative perspective in this article is very much agreeable. The issues are so delicate enough that only those who technically know the issue can explain it thoroughly. However, the article could not stand on its own should there be no comparative basis of the figures being given by the economists.
To illustrate, some analysts would say that the recession may be undertaken should the housing sector fail to stabilize the current condition as what they have probably undergone for the past years. Another analyst would rebut the earlier statement saying that although the housing sector remains to be sluggish, there would not be any recession to be experienced. The analysts would have probably based his answer from a norm or a standard which has been fully accepted by many. As stated in the article, the analyst said, “… previous recessions have always had construction plus something else combining to create job loss. Without a second source of weakness, we’re predicting sluggishness but not recession.”
Considering that the news article has exerted efforts to interview different people who are experts of their field, the article may seem to be reliable and at least accurate at that. Since one of the primary reasons of writing for a newspaper is to inform the readers the truth and from verified sources. In the same article, the author used the statements issued by those who are members of the academic-field, the Federal Reserve, the Rockefeller Institute of Government in Albany, and other well-known and substantiated sources of information. With this, it can be said in conclusion that the by using the normative perspective in dealing with matters relating to macroeconomics, the audience maybe able to really learn because what is being emphasized is coming from a point of view which is not entirely different from what an ordinary people has been accustomed with. Therefore, macroeconomists are able to fully explain what is happening in the society in a simplified manner.
Goodnaugh, Abby. “Housing Slump Pinches States in Pocketbook”. The New York Times. 7 May 2007 <http://www.nytimes.com/2007/04/08/us/08housing.html?pagewanted=2&ei=5124&en=751c0af1f95afd75&ex=1333771200&partner=permalink&exprod=permalink>.
“Normative Persepctive”. 7 May 2007 <http://www.csudh.edu/dearhabermas/agcon01.htm>.
“WEAKER HOUSING SECTOR SLOWS THE U.S. ECONOMY.” US Economic Outlook. MFC Global Investment Management. 7 May 2007 <http://www.mfcglobal.com/mfcglobal/pdf/eoutlook_fall06.pdf>.