Boosting the Economy: 0% Financing on New Cars

Boosting the Economy: 0% Financing on New Cars

The economy had been moving in slow motion for the last year and the dreaded "R" word, recession, had been put into circulation by the media and consumer analysts. Then, of course, the events of September 11th occurred and the economic slow down sounded just fine as opposed to the economic standstill that many feared. Staring into the face of recession and contemplating the national tragedy, corporate America was desperate to find a way out. Not that they were alone, but Joe Schmoe, a blue-collar worker, couldn't do much to change nation's economic dilemma. And good old Uncle Sam hand his hands tied with the terrorist problems. Even so, saying that the government was going to take action is just to say that the government would help corporate America take action. Of course the answer was to get and keep America spending; keep money circulating. But how was the question that loomed.

As we know, many of the major automobile companies decided that they would offer 0% financing on new cars in order to lure Americans to spend money. At this point we don't know what the final effects will be, whether this action will actually stimulate the economy and keep America from a recession. However, there is much to speculate on concerning the possible effects. And it is interesting to consider exactly who might be reaping the benefits from this action. In addition, this type of economic action seems to have elements that fall into a category of similar capitalistic avenues that many authors read this semester have analyzed in the past.

Benefits

Now, why should we think that this action will benefit the economy? Again, in the face of recession the goal is always to get people spending and keep money flowing. New automobiles are a high dollar item that can get money circulating in a hurry. New automobiles are also an item that the majority of the population cannot afford without financing. This makes the idea of buying an automobile with no finance charges very appealing. From the big picture perspective, the idea is that enough automobiles would be sold to keep money circulating and to keep consumer confidence high so that we could talk ourselves out of a recession. Basically, the remedy for recession is keeping people believing that the economy will be okay, consumer confidence, and therefore they will not be reluctant to spend and money will circulate.