Major Economies Caught in Debate Between Debt, Growth
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This is the VOA Special English Economics Report.
Concerns about a double-dip recession were back in the news this week. Some economists warned of the possibility of another downturn if governments withdraw growth measures too quickly. But others warned of the dangers of letting deficits and debts continue to grow.
Leaders of the world's biggest economies agreed Sunday to cut their deficits by half or more by twenty thirteen. They also promised to try to reduce the size of their government debt in relation to their economy by twenty sixteen.
Western countries have not faced such high debt levels in sixty years. Leaders like President Obama, however, argue that the recession would have been much worse without the spending.
At the close of the Group of 20 Summit in Toronto, Canada, the president noted moves in Europe to cut government spending.
BARACK OBAMA: "A number of our European partners are making difficult decisions. But we must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs and growth today."
In the United States, stocks have been falling since April on concerns about the recovery. This week a business research group reported a drop in consumer confidence after three months of gains. The Conference Board said more Americans believed business conditions were bad and that jobs were hard to get.
New jobless claims rose in the latest government report. Still, employment expert John Challenger says his findings suggest that the nation's employers are not expecting a double-dip recession. He points to a big drop in the number of planned job cuts announced by employers over the past six months.
Even so, other reports showed big drops in housing sales in May. That followed the end of a homebuyer's tax credit. This week, Congress voted to extend the credit to the end of September -- but only for people who signed a deal by April thirtieth.
Also this week, the House of Representatives passed a major bill to rewrite financial rules and add consumer protections. The bill provides a way for the government to close failing banks.
President Obama had hoped to sign a final bill by July fourth, Independence Day. But the Senate has delayed action on its version of the financial reform bill until Congress returns July twelfth. Democrats agreed to remove a proposed fee on banks, in hopes of securing passage.
The vote was delayed in part because of the death of longtime Senator Robert Byrd, a Democrat from West Virginia.
And that’s the VOA Special English Economics Report. You can read and listen to our programs at voaspecialenglish.com. I'm Mario Ritter.