The negative influences of the global financial crisis started in 2008 are still continuing in the developed countries. After 2011, the European economy and the American economy have exhibited a growth; however, the developed economies could not stable their economies yet. The demand for the investment goods was not satisfactory in 2014. An important part of the investment goods are the durable goods. Many of the investment goods are counted as durable goods.
The developed economies in the European Union have implemented recovery policies. The fiscal policies have been inevitable for many countries. The governments have had to bail out the large companies in trouble. The governments have spent billion dollars to bail out those companies. The worst influence of the global financial crisis on these countries has been the negative structural changes in the economies. Many multinational companies have decided to change their production plants’ locations, and they have moved many of their production plants to the Asian countries those provide relatively better economic conditions for production.
The European labor market struggling with the global financial crisis has been requesting relatively higher wages. The European labor market is a very strict market about the labor rights. The strict legal regulations protecting the labor rights have created sticky wages in Europe. The multinational companies always look for the labor markets those are more elastic in terms of prices. The microeconomics theory informs us that the wage has to be equal to the productivity of the labor for an efficient production. In the European labor market, the sticky prices do not allow this situation. Subsequently, the European labor markets do not allow the companies to have comparatively high efficiency level.
Another important negative influence of the global financial crisis is the loss of trust for the economies in the developing countries. We observe that many agents in the developed economies expect other crises in the near future. Because of the loss of the trust in the markets, the recovery economic policies are ending up with the undesired results. The main reason behind this is the investors’ decisions. Many investors are hesitating to make new investments in the developed economies, and the developing economies with the advantage of low labor cost and high market expendability potentials are more attractive for the multinational companies. The investments of the multinational companies in the developing Asian countries are increasing every other day, and these countries are making large amount of exports to the developed countries. The foreign trade balance between the developing Asian countries and the developed economies is unstable, and it looks like the foreign trade balances might increase the risk of new potential global crises.
Even if the developed economies after 2011 have exhibited” increasing rates of economic growth, the economic structures of the developed countries do not seem to be strong enough to create a stability in the markets. The markets in the developed countries do not create enough new job and investment opportunities for the workers and the entrepreneurs. If the developed economies cannot convince the people about the recovery, the developed economies might get into relatively bigger troubles.
The decrease in the orders of the durable-goods is an important sign for the worsening conditions in the developed economies. Many of the investor products are durable-goods and also the demand for the durable-goods decreases as corresponding to the loss of trust in the economies. With a simple explanation, people purchase relatively more of durable-goods when they believe that the economic conditions will provide them relatively better or at least stable conditions in the future. Thus, the decrease in the orders of the durable-goods is related to the negative expectations in the economies.
House, Jonathan. "Weak Durable-Goods Orders Stir Concerns on Growth." The Wall Street