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Economic indicators and how they influence the whole society
Economic indicators and how they influence the whole society
Positive and negative effects of inflation in an economy
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In order to assess the current state of the economy, the examination of important economic indicators or variables has always played a vital role in the understanding of the complex economic systems we live in. The analysis of these economic variables studied by many, not only has served as a tool to evaluate the current economic performance of a country, but also has allowed experts to envisage and continue the pavement of an economy's road. Currently, some economic variables have had favorable improvements indicating a general good outlook for the economy for the following months, requiring a further individual analysis and comparisons in order to foresee crisis or successes. One of the important economic variables being tracked is the consumer price index released by the Conference Board every month. Lately, people have claimed the economy seems to have a fair projection for consumer spending to some extent based on a 3.2 index increase in the last report. More specifically, thanks to the recent spending of the top 15% households comprised by higher income families, according to the report made by Kathleen Madigan of the Wall Street Journal in the article "Vital Signs: The 15%ers Are Feeling Better — and That’s Good for Economy’. However, the article and the chart posted note an important observation regarding the study of this trend. In 2012, the Commerce Department data implied the economy would suffer as high-income consumers felt nervous about the state of the economy generating a cutback in spending. Nevertheless, the trends seems to be different nowadays given that the economy is reacting to a new financial atmosphere in a new season. The data presented by Commerce notes wealthier families have decreased their spe... ... middle of paper ... ...t a winter can have on people preventing them to go out to look for a job, the core inclination that this variable seems to be taking appears to be favorable for the economy. Therefore, one can expect to presence upcoming favorable improvements in terms of hiring and unemployment rate, but ideally it would be better to not make rambunctious assumptions in this aspect, and see how the real state of the economy in terms of unemployment develops over the next months. In summation, based on these three but important economic variables one can expect slight improvements for the economy in different aspects. The best news appear to be an expected rise in projected consumer spending, while a steady unemployment rate is expected, and small but substantial growth in GDP seems to be around the corner thanks to an encouraging PMI that reports expansion at a lower rate.
Macropoland, a natural gas and oil importer, has a natural rate of unemployment of about 4.5% and a long run average rate of inflation of about 2%. However, there are two specific time periods where these rates fell below their potential. During the period between 1973-1974, the country had an inflation rate of about 15%, with an unemployment rate of nearly 13%. And now, they are experiencing an unemployment rate of 9% and an inflation rate of 0.4%. As their new economic advisor, it is my job to explain these two time periods.
The trends in unemployment affect three important macroeconomics variables: 1) gross domestic product (GDP), 2) unemployment rate, and 3) the inflation rate.
Economic indicators often affect and influence the value of a country's currency. The Trade Deficit, the Gross National Product (GNP), Industrial Production, the Unemployment Rate, and Business Inventories are examples of economic indicators. We will be dealing with four specific indicators: interest rate, inflation, unemployment, and employment growth, as well as Real Gross Domestic Product (GDP). Real GDP is so called because the effects of inflation and depreciation are accounted for in the figures. The state of the economy is important both on a micro and macroeconomic level.
In the United States there are four social classes : the upper class, the middle class, the working class, and the lower class. Of these four classes the most inequality exists between the upper class and the lower class. This inequality can be seen in the incomes that the two classes earn. During the period 1979 through the present , the growth in income has disproportionately grown.The bottom sixty percent of the US population actually saw their real income decrease in 1990 dollars. The next 20% saw medium gains. The top twenty percent saw their income increase 18%. The wealthiest one percent saw their incomes rise drastically over 80%. As reported in the 1997 Center on Budget's analysis , the wealthiest one percent of Americans ( 2.6 million people) received as much after-tax income in 1994 as the bottom 35 percent of the population combined (88 million people). But in 1977 the bottom 35 percent had about twice as much after tax income as the top one percent. These statistics further show the disproportional income growth among the social classes. The gr...
To conclude, I believe it is understandable by now that for a consumer who is a saver in the first period has not become worse off and in some occasions where the income effect exceeds the substitution effect has become better off. On the other hand a borrower in the first period has definitely become worse off than before.
State of the Economy is apart from the geopolitical and other uncertainties; the forces affecting demand this year appear, on balance, conducive to a moderate strengthening of the economic expansion.
Add Changes in the Gross Domestic Product (GDP), Income/Wages, Consumer Price Index (Inflation), Currency Strength, Corporate Profits, and Balance of Trade to bullet point list.
The United States economy is racing ahead at dangerous speeds, and it may be too late to prevent the return of widespread inflation. Ideally the economy should move ahead gradually and grow at a steady manageable rate. Mae West once stated “Too much of a good thing can be wonderful” and it seems the U.S. Treasury Secretary agrees. The Secretary announced that due to our increasing surplus and booming economy, instead of having an outsized tax cut, we should use the surplus to further pay down the national debt. A tax cut, though most Americans would favor it initially, would prove counter productive. Cutting taxes would over stimulate an already raging economy, and enhance the possibilities of an increase in the rate of inflation. Paying off the national debt would actually help lower interest rates and boost investments, and therefore further increase the wealth of the population, while keeping inflation at bay.
“Macroeconomic indicators include economy-wide phenomena such as unemployment rates, national income, rates of growth, gross domestic product, inflation, and price levels” (Page & Stevens, 2005).
Difficulties in Formulating Macroeconomic Policy Policy makers try to influence the behaviour of broad economic aggregates in order to improve the performance of the economy. The main macroeconomic objectives of policy are: a high and relatively stable level of employment; a stable general price level; a growing level of real income (economic growth); balance of payments equilibrium, and certain distributional aims. This essay will go through what these difficulties are and examine how these difficulties affect the policy maker when they attempt to formulate macroeconomic policy. It is difficult to provide a single decisive factor for policy evaluation as a change in political and/or economic circumstances may result in declared objectives being changed or reversed. Economists can give advice on the feasibility and desirability of policies designed to attain the ultimate targets, however, the ultimate responsibility lies with the policy maker.
Euromonitor International, 2012, “Consumer buying behaviour in the recession: global online survey - executive briefing”, Euromonitor International, Accessed: 23/05/14
...also increases in December 2013 where as both the change in PCE and PDI decreases in December 2013. The increase in December 2013 of the CSI can be explained by the continued increase from October 2013-November 2013. Consumer confidence continued to increase then because consumers felt confident in a pattern of increase. CSI thus decreased in January 2014 in response to the decrease in PDI and PCE in December 2013. PDI and PCE both increased in January 2014.For all three indicators, the general trend is a positive increasing trend. CSI has an extra data point for February 2014 and thus all current data shows an increase from the previous data point. This points towards increased spending due to increasing disposable income which in turn will create an increase in consumer sentiment. Thus it seems that the consumer activity indicators point towards economic growth.
In finance terms, household income is the combined income of all members of a household who jointly apply for credit. Household income is an important risk measurement used by lenders for underwriting loans. Livingstone and Lunt (1992) emphasizes that the disposable inc...
We are now approaching the half of this year. There are scores of surprising predictions from experts regarding this year’s economic and business condition. According to the economists, the world economy is predicted to be more thrive than last year, the economic condition of the U.S. was also estimated to increase 3% and significant increase in the trade sector. This prediction may bring benefits for developing countries like Indonesia in the trade sec...
The Bureau of Labor Statistics uses Seasonal Adjustment to accommodate for the sharp increases and decreases due to seasonal employment and layoffs. By removing the fluctuations, the graphs are easier to analyze, “Seasonal adjustment eliminates the influence of these fluctuations and makes it easier for users to observe fundamental changes in the level of the series, particularly changes associated with general economic expansions and contractions” (Bureau of Labor Statistics). Typically, seasonal employment flows with the seasons, for example during the winter months, unemployment is higher because of industries like construction and agriculture are halted. On the contrary, at the beginning of the summer months, unemployment is lower because student enter the workforce as the return home from school.