In some disappointing data for the United States economy, new orders for durable goods fell by 4% in January.  Durable goods are equipment that companies use to produce the goods that they make.  This may seem to be downturn in an economy that has been doing better, but all is not as bad as it seems.  In 2011, there was a tax credit that allowed for a 100% reduction for any equipment bought last year.  The Wall Street Journal said that demand for durable goods, is actually rising and that it is expected to continue to rise.  One reason that is given, is an important aspect of the suppy curve; technology.  Companies are upgrading their technology so that they may be more efficient and not need as many workers.  This should cause a shift in in the suppy curve.  In 2011 there was a shift out in the demand curve due to the tax credit.  While it is not exactly a change in income for the companies that bought the durable goods, I think it can be classified as such since it did affect their overall budget.  I would conclude this piece by saying that i expect the demand to rise soon and for it to continue to rise for at least the rest of 2012.


Source: http://blogs.wsj.com/economics/2012/02/28/equipment-demand-hasnt-dropped-out-just-taking-a-breather/?mod=WSJBlog&mod=marketbeat

Bank Fees

Last year, nearly ten percent of people changed their bank accounts.  This is far higer thatn in the past; up from 8.7% the year before and 7.7% 2 years before.  The resaon that is given is consumer dissatisfaction.  The reason that consumers are feeling dissatisfaction were the fees that they had to pay.  The article states that these fees, were, "the straw that broke the camel's back."  When the consumers switch the bank that they use, it is an example of a substitute good.  While a bank is not a product like a soda is, it is a service, and a service can have substitute goods.  This is a good example as the consumers change their taste in banks, due to the fees, and switch to another bank.  This is a change in taste because it is their preference because they do not like the fees.  In a world where substitute goods are plentiful, I believe the story to be learned here, is not to do little things to upset the consumers.  In this case certain banks did, and the consumers switched to a substitute good in the form of a different bank.



Source: http://www.huffingtonpost.com/2012/02/27/switching-banks-high-fees_n_1303520.html?ref=business

The holiday season is normally a time when consumer spending, or in microeconomics terms "demand", increases.  This was not the case in December 2011, however.  According to The Huffington Post, consumer spending by .1 percent in December when inflation is taken into account.  They state that news that the holiday season was big, was overhyped and not factual.  One reason given as to why even though December was not a bad month for the economy, is that consumer spending declined and did not keep up with the production of goods is because the jobs that were created were primarily minimum wage jobs.
This leads me into analyzing this event from our knowledge of microeconomics.  In this case, the demand curve shifted inward as the "real wages" of consumers continued to fall.  Since consumers are making less, they have a lower disposable income, which means that the demand curve will shift inward.  This is also shown by the fact that much of the overhyping for the holiday season was caused by consumers buying goods at much lower prices.  This also correlates with our knowledge of microeconomics, because as the demand curve shifts inward, the point of equilibrium will change and be at a lower price.  Eventually one would expect that either the supply of goods will be lowered, or income will rise and the equilibrium point will shift back closer to where it has been previously.  This event should not cause panic that the economy is failing however, as the "real wages" actually rose a bit in December, but consumers put more of it towards savings.  This illustrates another concept,that of opportunity cost.  For many consumers, saving some of their income was worth more to them, then purchasing more goods.  Therefore, the opportunity cost to purchase goods fell.  My prediction is that after a period of time when consumers save a decent portion of their income, they will decide their savings are high enough and they will go back to their normal purchasing habits.

Source: http://www.huffingtonpost.com/2012/01/30/illusory-holiday-shopping-spending-december-2011_n_1241238.html?ref=business