Business cycles in France

Résumé du document

The INSEE released one of the most concerning figures about the French economic environment: the opinion of the households has never been so low since 1987. In fact, tightening credit conditions, higher oil and primary goods prices, and the American financial crisis are undermining the mood of consumers. Despite this, concerning uncertainty, French growth is still a reality, thanks to the exports that still exist and to the increasing capacity utilization of firms. But, the French economy also depends on external factors as the consequences of the supreme crisis, the worrying health of the US demand. Those two aspects of the French economy make economic forecasts vary from one institution to another and from banks to public organizations. We can try to explain the way those figures have been computed and the benefit of those various calculation methods. We should also try to link those methods to the main economic theories and try to analyze the significance of the figures through those theories before drawing any conclusion about the future condition of the French economic health.

Extraits

[...] But according to them, the new trade actors of our globalized world are putting a great pressure on labour prices and therefore, on consumer goods prices, and the oil occurring is more of a deflationist kind and the financial crisis is now encouraging banks to cut down the rates, which is another factor of deflation. Without lightening the global view, the CA seems more optimistic than the BNP or the INSSE concerning our economy. It points out the issues to tackle but refuse to be too alarmist. Conclusion Figures can be quite different depending on the way they've been computed and the institution which released them. [...]

[...] Business cycles Introduction The INSEE has just released one of the most concerning figure about French current economic environment: the opinion of the households has never been so low since 1987. In fact, tightening credit conditions, higher oil and primary goods prices, and the American financial crisis are undermining the mood of consumers. Despite this concerning uncertainty, French growth is still a reality, thanks first to the exportations that still exist and to the increasing capacity utilization of firms. But the French economy also depends on external factors as the consequences of the subprime crisis, the worrying health of the US demand. [...]

[...] Their interpretation can also vary. For instance, the INSEE talks about a sharp decrease of the consumption due to the uncertainty of the global economic climate whereas the BNP stresses the fact that the private consumption can keep on rising thanks to saving pools. Those two interpretation are acceptable but it seems that the INSEE has a much more Keynesian approach of consumption and forgets that our economy is completely opened to the rest of the world and that external factors can play a big part in the our national changes. [...]

[...] In addition, the inflation rate is around which fits the BCE standards. Despite the fact that this inflation remains lower than the wages increase, (which foster the purchasing power), French households fear that it would increase faster in the future, and that is another factor of loss of purchasing power. The BCE and the French government have the same interest in restraining the inflation since it would foster investment and therefore, consumption. In addition, if we look at those figures a bit more deeply, we can see that the main reasons for inflation are the increase in tobacco, food and primary goods prices. [...]

[...] That is precisely what happened in the past few semesters: the rate is growing regularly each year, and when the utilisation reaches its maximum, firms have to invest in new machines and to hire people to use them. en % : industrie hors énergie et IAA. Champ : France métropolitaine et Dom. Source : Insee, Comptes nationaux base 2000. Another explanation for this decreasing unemployment rate could come from the Keynesian theory. In fact, French households keep on consuming quite a lot compared to other developed countries and this relatively high demand is boosting the industry and therefore, the employment rate. [...]