Usa Economics Essay Research Paper Themillion or — страница 3

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income. This can lead to a downturn in the economy, or it can mean that prices are inflated. It can also mean that a shift in consumer preferences has occurred, e.g. preference for IBM computers versus Apple. A high level of inventory at the manufacturing level indicates that orders are slow or the firm is overstocking inventory. Since inventory space is costly, poor inventory management can result in the need to expand warehouse storage and can result in a decrease of profit. Inventory surpluses at any level affects the economy when stores, wholesalers or manufacturers have to liquidate finished goods at less than the intended selling price, thereby reducing forecasted profit margin. Changes in this indicator are driven by consumer demand and references, which can rapidly

deplete inventory or cause inventory to stagnate, and technologies that streamline inventory management and control. New orders for durable goods declined 2.3 percent in February. They dropped 2.2 percent in January following a 6.5 percent increase in December. The February decrease was a reflection of large declines in orders for transportation equipment, mainly civilian aircraft, and industrial machinery. Despite the volatility of orders and shipments, manufacturing activity appears to be expanding at a good pace in the first quarter of 2000. The Federal Reserve’s index of industrial production suggests that manufacturing production in the first quarter is growing at its strongest pace since 1997. Consumer Spending Two of the thirteen principle economic indicators tracked by

the Bureau of Economic analysis fall under the category of Consumer Spending. Consumer spending includes Retail Sales and Personal Consumption Expenditures. The Retail Sales economic indicator measures the sales of retail establishments, adjusted for normal seasonal variation, holidays and trading-day differences, and are not annualized. In recent months retail sales have increased faster than expected. February saw an 11.1 percent increase where a 0.9 percent increase was expected, marking the third strong gain in the last four months. The recent beating that the American public is taking in gasoline prices is undoubtedly the cause for a 4.3 percent increase in service station sales and one reason there has been a strong over all retail sales gains. February sales reached $265.7

billion, an increase of 9.4 percent compared to February of last year. The 11.1 percent average sales increase for January and February has risen at an annual rate that is on track for the largest quarterly growth in the last year. With the exception of six points of quarterly data retail sales have increased a minimum of 5 percent and as much as 13 percent per quarter as compared to the prior quarter since 1994. This steady increase in retail sales indicates public trust in the current American economy. Their willingness to spend their hard-earned money in the retail market instead of acting with increased caution by hoarding funds could be an indication that the general public also has faith that the American economy will continue to prosper in the future. Increased retail

sales are a direct reflection of the level of Personal Consumption Expenditures. Personal Consumption Expenditures economic indicator measures consumer spending for all goods and services in the economic market. These expenditures comprise approximately two-thirds of the total GDP. When viewed as a running average, nearly every quarter since 1995, Real Personal Consumption Expenditures have realized quarterly gains compared to each previous quarter. With the recent increases in retail sales and the continued levels of Personal Consumption Expenditures there is no reason to doubt that our economy can continue it’s creditable levels of growth. These levels of fiscal activity have been and will continue to keep funds moving regularly through the financial sector within the

circular flow. Housing and Construction Housing Starts and Building Permits are the economic indicator used to measure privately owned housing units started and privately owned housing units authorized by building permits. These are considered good leading indicators of home sales and spending in general. Housing Starts are used to predict the residential investment portion of the GDP. Building Permits usually become Housing Starts in about three to four months. Building Permits are also a component of the leading economic indicators index. Single-family starts account for approximately 74 percent of all starts, and Multi-family units account for the rest. Monthly construction spending data produced by the Census Bureau are key source data for the GDP. The monthly construction