How+will+the+Japan+earthquake+affect+U.S.+economy?+-+JS+Choi

Title: How ill the Japan earthquake affect U.S. economy? Source: dailyfinance.com http://www.dailyfinance.com/2011/03/14/japan-earthquake-u-s-economy/ Date: 03/04/11

Explanation: This article is about how Japan’s earthquake affects U.S. economy. Overall, U.S. economy seems to get both benefits and drawbacks from this disastrous crisis. Benefits are that since Japan’s demand for food and machine is going to increase drastically to feed the refugee and to recover the destroyed infrastructure, amount of goods exported to Japan will increase temporarily. This will contribute a lot to U.S. GDP. Moreover, there are going to be problems with productions for automobiles in Japan. Therefore, there is going to be less automobiles imported in US, which means that Japanese automobile companies’ competitors such as GM can get advantage from this. This is because supply for Japanese automobiles will decrease for lack of capitals and transportation problem, thus creating a shortage in the market. This way, there is a high possibility that Americans will buy automobiles from Japanese automobile company’s competitors during this period. However, a drawback is that since Japan cannot export enough capitals for electronic devices to U.S. there will be decrease in supply and increase in price. This will decrease quantity demanded for electronic device market.

Vocabulary: Supply: The willingness and ability of potential sellers to produce a good or service for sale at a certain price during a particular time period. Quantity demanded: the amount of good or service that consumers are willing and able to buy at a given price. Shortage: Shortage occurs when quantity demanded is greater than quantity supplied Competitors: The companies that compete each other in the same market to get more customers.

Diagram: Diagram1 : Japanese automobile market

Diagram 2: American automobile market

Evaluation: I don’t think there is much to evaluate on increase in food and machinery export because this will only be temporary. However, in automobile market, the Japan earthquake can bring some changes. From U.S. economy’s point of view, I think this is the time when American automobile company can get its customers back from Japanese automobile company. The reason why GM and other American automobile companies are failing is because Toyota and Honda have already established customer loyalty in U.S. Since Japanese automobile companies have problems with supplying enough automobiles to their customers, GM and Ford Moto should increase their market share through promotion. However, GM and Ford Motor should not be happy about increase in customer’s demand because this can be just temporary. Once Japan comes back into business, everything will just go back to what it was before; dominance of Japanese automobiles. Therefore, through promotion and advertising, American automobile company can create larger customer base and loyalty which can permanently increase the demand for their automobiles.