The Economy’s Auto Bailout

Two major auto companies, General Motors (GM) and Chrysler went bankrupt during the Great Depression. The government must make a choice; participate in helping them, it will help the economy or let them fight for themselves. Both options will offend the American people to the government. The government decided to help them by establishing other programs such as automated support and TARP. Some people think automobile rescue is useless for small supplier companies, but this is the correct behavior of the government.

In the worst case of the financial crisis of 2008, the main purpose of Capitol Hill was to get the economy out of a serious recession. In relief, the automotive industry contributed 6% of the US gross domestic product, ie $ 500 billion. As automobile sales volume declined by 30%, economic output decreased by 1%. The automobile industry also employs 850,000 manufacturing workers and 8 million car dealers. As a result, the decline in production leads to direct unemployment and loss associated with the automobile industry.

In 2009, President Obama announced a new fuel efficiency standard for the car in the White House Rose Garden. New standards introduced after the relief of the automotive industry have been supported by automobile manufacturers. Dave McGrady, President of the Automakers Alliance of the Industry Trade Group at the time, said in a statement, "The significance of this announcement is that it has reached a new beginning, a time of cooperation." Demand for trucks and SUVs This is good news for automobile manufacturers who make high profits in these cars. However, due to federal regulations, the size and inefficiency of trucks and SUVs are limited. Lower fuel standards will allow the company to sell more fuel in the coming years.

I believe car rescue is an important factor driving economy from economic downturn. Mark Zandi, economist at Moody's Analytics and Alan Blinder from Princeton University, analyzed and wrote as follows. Destructive, especially the wider economic impact in the Midwest. "This road shows the desire for the government to take recovery measures as soon as possible, with little uncertainty about long-term sustainability among the uncertainty faced by automakers, due to the sex economic slowdown GM Reducing employment and production irrespective of whether or not you can receive relief In addition, when the recession is over, Toyota and Honda will continue to increase the American factory to provide employment opportunities for American car workers.