Business indicators presentation team 1 michele^j misty^j lofton and liana
Prepared by: Team 1Michele, Lofton , Misty, and Liana
The current condition of theeconomy, in our Option: Possibly critical. Huge deficit. None-the-less. Our team believes the economy is coming back slowly. HEADLINES: Consumer confidence Climbing. Growth up. Expansion up. No inflation pressures in the Feds eyes. Comments: Prove / disprove ; (?)/ disaster better economy. Dad is in real-estate more work Mine leaving to morocco for contracts Jan., April, July.
WHAT THE ECONOMY IS DOING TODAY The Economy they say is turning around slowly. Trying to recover, slowly recovering?
What is an economic indicator:"Business Indicators“ Cover selected quarterly data and offers a statistic about the economy. One application of economic indicators is the study of business cycles.
Why are Economic IndicatorsImportant? http://zfacts.com/p/461.html National Debt Clock Here Look for major shift and trends, understanding the outcomes of problematic events, see the unknown. Put numerical meaningful values on things we admit we do not know. What is going on, what is gong tot happen, show our expectations, make order out of chaos, know exactly how many, the probability of an event. To try to describe the operations in the role of the aggregate, weather to bet on this or that outcome, Measure frequency, challenge our intuitions, View info historically, to put into context and subtext, see www.pedictwise.com Speculate, more accurate that the polls or the news. www.makingsence.com Paul Solomon. Every week there are dozens of economic surveys and indicators released. In the past, only professionals and economists had the advantage in receiving this type of data in a timely fashion. Fortunately, the internet has changed this giving everyone access. Economic indicators can have a huge impact on the market; therefore, knowing how to interpret and analyze them is important for all investors. Markets use information to set prices. Investors use all the information at their disposal to make decisions. If a set of economic indicators suggest that the economy is going to do better or worse in the future than they had previously expected, they may decide to change their investing strategy. Read more: http://www.investopedia.com/university/releases/#ixzz29Eq9FEtl
How do indicators help policymakers make decisions? Certainly, the decision of the voter will not be taken on the basis of indicators alone. Many other factors play a role, What makes indicators unique as determinants of business. They reveal the success or failure of decisions. There is no causal link between policy decisions a company will take. Indicators instead punish bad decisions, and reward good ones . Decisions come along with the indicator If the media misuse GDP as a measure of success, then any decision that increases GDP is “good”, even if it decreases real welfare... We will examine in more detail how indicators, through their influence on the decisions, make pressure on the decision-making process of governments and parties. We will look at four indicators and compare there similarity and differences. All four indices are aggregated to a “Policy Performance Index”, PPI, and presented as a line chart organized in concentric graphs. • the size of each segment of the graphs reflect the importance (the “weight”) of the issues for politics or business; each segment reflects the judgment of current policy performance on a scale, to see the good and the bad. The aggregated valuations of the underlying segments shows the average of the underlying valuations. Read more: http://esl.jrc.it/envind/idm/idm_e_09.htm
How do they work with the CircularFlow Model? A visual model of the economy that illustrates how households and businesses interact through markets for products and markets for resources. The top half, represents product markets: Households interact with business firms to supply labor, for income, and use their incomes to buy their goods and services. The first interaction occurs in markets for resources, second occurs in markets for products. http://econperspectives.blogspot.com/2008/04/circular-flow-diagram.html http://en.wikipedia.org/wiki/Circular_flow_of_income Households allow Financial sector “Businesses” to hold savings. Pay tax (direct & indirect) to the Government. http://wiki.answers.com/Q/In_the_circular_flow_of_the_economy_what_ do_households_do http://books.google.com/books?id=TllDu7ibouwC&pg=PA105&lpg=PA105 &dq=capacity+utilization+and+circular+flow+model.&source=bl&ots=cOz ferUWoX&sig=Y9nmbURZgTfwhZHZFb8vfJAj88k&hl=en&sa=X&ei=1lF8U J7qIIPo9ASfyIDwDg&ved=0CB0Q6AEwAA#v=onepage&q=capacity%20uti lization%20and%20circular%20flow%20model.&f=false
How do they work with Aggregate Supply andAggregate Demand Models? Aggregate demand and supply measure the total demand and supply of goods and services across an entire economy. Aggregate demand simply means spending — spending by households, businesses and governments for consumption goods and services or investments in structures, machinery and equipment. finding some way to create jobs and stimulate growth. But the truth is that there really isn’t much we can do. The only policy that will really help is an increase in aggregate demand. At the moment, businesses don’t need to invest because their biggest problem is a lack of consumer demand. Nonfinancial businesses are now sitting on close to $2 trillion in liquid assets that could be invested immediately if there was an increase in sales, and banks have $1.5 trillion of excess reserves that could be lent as well. Fiscal policy could raise velocity and growth by getting money moving throughout the economy. But since that is not feasible, the Fed is the only game in town. Joseph Gagnon, a former Fed economist, says that it should immediately increase the money supply by $2 trillion and promise to keep increasing it until the economy has turned around. The right policy can be debated, but the important thing is for policy makers to stop obsessing about debt and focus instead on raising aggregate demand. Read More: http://economix.blogs.nytimes.com/2011/08/16/its-the-aggregate-demand-stupid/ Under aggregate analysis, when aggregate demand rises faster than aggregate supply, inflation rises. Lagging aggregate demand, meanwhile, may be a sign of an economic recession. http://www.ehow.com/facts_5312128_aggregate-economic-analysis.html
*DEMAND* *SUPPLY*Consumers willing and able to buy … Producers willing and able toproduce and make available for sale …Law of Demand: … at each of a series of possible prices during a specific period. As Price increases, Demand decreasesDETERMINANTS: Law of Supply:•Taste or Preference 5 As Price increases, P quantity supplied increases•Number of Buyers Surplus R 4 DETERMINANTS: NOT •Resource Prices•Income I •Normal 3 Equilibrium •Technology •Inferior C Price & Quantity •Taxes/Subsidies•Price of Related Goods E 2 •Substitute Shortage •Prices of Other Goods/Services •Complementary 1 NOT •Producer Expectations •Independent ($) •Number of Suppliers – in pool•Consumer Expectations 0 2 4 6 8 10 12 14 16 •Price QUANTITY •Income (in thousands)
Discussing Business Indicators Capacity use % Manufacturing Orders $ (PMI) Composite Index of Conditions % Wholesale Sales $
79.7% Capacity Utilization79% 79.1% 77.7% 77.8% 77.5%77% 77.1% 75.6%75% 74.9% 74.4% 74.3%73% 73.4% 72.6% 72.3%71% 71.1% 69.8%69% 67.6%67% 67.1% 66.1% 65.8%65% 2008 2009 2010 2011 2012 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
80787674 200872 200970 201068 201166 2012646260 Jan July October December Capacity Utilization %d.docs.live.net@SSLDavWWWRootc594ef5be4ece7a7SchoolEconomiocsEconomics Business Indicators Project Team 1.xlsx
Business Cycle 79.7 79.1 PEAK 77.7 77.5 77.8 77.8 77.1 75.6 75 74.9 74.3 74.4 73.4 72.3 72.6 71.1 TROUGH 69.8 67.6 67.1 65.8 66.1 65 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Measuring Inflation: Old – New / Old = % Increase in Inflation. Causes: Transportation, War, Politics, Money Supply.Measuring Domestic Output: Economic Pulse: Explain why production level is at present level.Provides info to make policy descions short term and long term.
Explain in detail Capacity Utilization indicator: The extent to which an enterprise or a nation actually uses its installed productive capacity. Thus, it refers to the relationship between actual output that is produced with the installed equipment and the potential output which could be produced with it, if capacity was fully used.
What makes up the capacity utilization indicator? A businesses plant and equipment do effect short run fluctuations in demand and they can be used at different capacity utilizations. For maximum profits. The capacity utilization rate measures the proportion of plant and equipment used in production by the manufacturing, mining, electric and gas utilizes industries. Used as an indicator of inflation, especially when it consistently climbs above the 84% level. When factories operate this close to full capacity, companies are more likely to raise prices. Capacity utilization also reveals employment trends. Factories tend to hire more people or to have employees work more overtime hours when production is at peak levels. Read more here: http://info.wsj.com/classroom/Indicators/def.data.html
Where and when is the capacity utilization indicator published? The Capacity Utilization Rate is released monthly and is periodically revised along with the related Industrial Production number. In the United States, both of these economic data releases usually come out 16 days after the month ends and come directly from the Federal Reserve.
Revision of Industrial Production and Capacity Utilization The Federal Reserve Board plans to issue its annual revision to the index of industrial production (IP) and the related measures of capacity utilization at the end of March 2013. The revised IP indexes will incorporate detailed data from the 2011 Annual Survey of Manufactures, by the U.S. Census. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2011 will also be incorporated. The update will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry. In addition, the estimation methods for some series may be changed. Any modifications to the methods for estimating the output of an industry will affect the index from 1972 to the present.
How reliable is the capacity utilization indicator? A reliable indicator of Inflation. Depends on the extent of the variation of the system. I is A Time Cost Trade off.
What is the significance of the capacity utilization indicator concerning theeconomys position? Lead, Lag or Coincident? Leading indicators: usually change before the economy as a whole changes. They are therefore useful as short-term predictors of the economy. Significance: Need to know if a business / resource is Exploited or over- exploited like the our fishing industry. Help define current approaches in an ever changing world market. Help compare to alternative methods of utilization and to different countries. See following for details http://en.wikipedia.org/wiki/Economic_indicator
By itself, what does the capacity utilization indicator tell your team about what the economy is doing? Growing, stagnating, or declining in the long term. Like Flocculating, lack of demand. Plenty of supply. Class notes to follow: natural real GPA (trend), actual GDP (real output), downturn or recession, recovery, expansion(same) , Why war decrease our business – sends our resources away. Measuring domestic output. Know economic pulse- measure and explain production is at present level (short term). And measuring GDP. Slope of a line how quickly something changes. Independent variable cause or source. Dependant variable outcome or effect. Calc slop of the line y= mx+ b. Or measure productivity. CAUSES: Transportation, War, Politics, Money Supply.
Describe the activity, according to the data your team gathered, of this capacityutilization indicator. Example: Industrial production fell 1.2 percent in August after having risen 0.5 percent in July. Hurricane Isaac restrained output in the Gulf Coast region at the end of August, reducing the rate of change in total industrial production by an estimated 0.3 percentage point. Manufacturing output decreased 0.7 percent in August after having risen 0.4 percent in both June and July. Precautionary shutdowns of oil and gas rigs in the Gulf of Mexico in advance of the hurricane contributed to a drop of 1.8 percent in the output of mines for August. The output of utilities declined 3.6 percent. At 96.8 percent of its 2007 average, total industrial production in August was 2.8 percent above its year-earlier level. Capacity utilization for total industry moved down 1.0 percentage point to 78.2 percent, a rate 2.1 percentage points below its long-run (1972--2011) average. http://www.federalreserve.gov/releases/g17/current/
Notes: Capacity Utilization is up for a second month, pushing past analysts expectations to stand atthe highest level in more than five years, according to the UMich/Reuters sentiment index; the gaugerose to 83.1, the highest level since September 2007. http://www.marketwatch.com/economy-politics(Market Watch) — Producer prices climbed sharply in September for the second month as gasolineprices jumped, Producer prices rose 1.1% in September after an increase of 1.7% in August, the LaborDepartment said. The core wholesale price index, which excludes food and energy prices, was flat inSeptember after a 0.2% gain in the prior month. Economists surveyed by Market Watch had expecteda 1.0% rise in the headline PPI and a 0.2% increase in the core rate. See Market Watchscomprehensive economic calendar.The gain in producer prices, tracking the level of inflation at the wholesale level, was due tocontinued higher energy costs — particularly gasoline. Energy prices advanced 4.7% in Septemberafter having risen 6.4% in August. A 9.8% gain in gasoline prices accounted for more than 80% of theSeptember gain, the Labor Department said.Food prices rose 0.2% in September, for the fourth consecutive increase. Analysts said the impact ofthe severe drought in the Midwest is slowly filtering up the production chain. Read the fullgovernment report.Treasury prices /quotes/zigman/4868283/delayed 10_YEAR 0.00% turned up modestly and the dollar/quotes/zigman/1652083 DXY -0.14% edged lower after the report was released. In the core priceindex, higher prices for light motor trucks were offset by declining prices for communicationsequipment.Compared with a year ago, the producer price index is up 2.1%, the highest level since March. Coreprices are up 2.3% over the past 12 months. http://www.marketwatch.com/economy-politics The economy AT A GLANCE
Manufacturing Orders $ To away with Highlight key words), but it makes .
Man Orders$70$60$50$40$30$20$10$- 2013 2009 2010 2010 2012
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What is the significance of the indicator concerning the economys position?Lead, Lag or coincident? Leading Indicator - Manufacturers new orders for consumer goods/materials .
How reliable is the indicator? W To away with Highlights key words), but it makes .
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Composite Index Industrial Conditions % W To away with Highlights key words), but it makes .
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What is the significance of the indicator concerning the economys position? Lead, Lag or coincident? Leading indicators are indicators that usually change before the economy as a whole changes. They are therefore useful as short-term predictors of the economy. Stock market returns are a leading indicator: the stock market usually begins to decline before the economy as a whole declines and usually begins to improve before the general economy begins to recover from a slump. Other leading indicators include the index of consumer expectations, building permits, and the money supply. The Conference Board publishes a composite Leading Economic Index consisting of ten indicators designed to predict activity in the U. S. economy six to nine months in future. Lagging indicators are indicators that usually change after the economy as a whole does. Coincident indicators change at approximately the same time as the whole economy, thereby providing information about the current state of the economy. There are many coincident economic indicators, such as Gross Domestic Product, industrial production, personal income and retail sales. A coincident index may be used to identify, after the fact, the dates of peaks and troughs in the business cycle.There are four economic statistics comprising the Index of Coincident Economic Indicators: Number of employees on non-agricultural payrolls Personal income less transfer payments Industrial production Manufacturing and trade sale See following for details http://en.wikipedia.org/wiki/Economic_indicator
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WHOLE SALE SALES $ To away with key words), but it makes. http://www2.census.gov/wholesale/pdf/awts/2010_awts_salesinv_table1.pdf Release Date: On or around the 9th of the month Release Time:10am Eastern Standard Time Coverage: Two months prior (report released six weeks after period end) Released By: U.S. Census Bureau Latest Release: http://www.census.gov/mwts/www/currentwhl.html Strengths: There is an Annual Benchmark Report for Wholesale Trade released every spring that includes more detailed information such as annual sales estimates and gross margins for the industries that are sampled in the monthly report Provides a good snapshot of the "middle" of the supply chain for many industries - up the channel from manufacturing, but not yet retail. A good indicator of supply/demand imbalances Long time series (since 1946) available Data provided "raw" and with seasonal adjustment Weaknesses: Longer time lag than most Industry breakdowns not too specific The previously-released Durable Goods report will have already shed some light on wholesale results The Closing Line : Monthly Wholesale Trade Report is not potent enough to move the markets, but it is very useful when taken in context with other industry-specific indicators to gauge sales and demand; it is also helpful in predicting quarterly gross domestic product (GDP) figures. Read more: http://www.investopedia.com/university/releases/wholesaletrade.asp#ixzz29GFzqXT7 Read more: http://www.investopedia.com/university/releases/wholesaletrade.asp#ixzz29GFhuzBp
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To By itself, what does the indicator tell your team aboutwhat the economy is doing? away with Hightlights key words, but it makes . The economy started crtashing about 2004 it started notcibley getiing in trouble numbers became available. About 2010 it started to slowly climb out – America eliminate the middle class. Middle class keeps balance. France they got real poor or real rich no middle class. Socialism makes poor poorer like a 3rd world counrty. We must learn to embrace the middle class it is going to be to deep of a dive. Crime goes up more. Haves and have nots hungry now. Steve jobs hoome was unlocked when alive they robed him. They walked right in you think he would understand because when our parents were young you cant leave now economy this way. Money not goin to far. 3 dollar beead loff. If people had notice food up salaries not keeping up with groceries. Go back 2 weeks later up 1 dollar but no raise at work. I have to buy and not prosper now. Product up and decreasing volume now. Nmnow 123 pk now 8 pk still charging for 12. they getting ricjhher we getting pooreer. You must have a plan you must have a oplan you will spend it all upo. Pay into 401k wait to receive money. 10 20 yrs agfo is not prospering now. Sams fill up car loaded dowm. Now a few bags. People of power will get reidhcer. Leaders stop bickering power struggle dangerous. Highways falling apart. Put them to work. Politiacl games suffer. Meet everyday. Put peole to work. Drain systems in jax all stoped up floods. 3 day rain we flodded now. No workers gutting grass, clearing pipes ect. I didn’t go with nowne of the foolsi in washington. Peole do need help. Walmart will keep you poor to not give benefits no full time work. Work at Walmart be on maedicaid now. They control temp in store from arkansa in all store, inefficent cant turn on air selfs keeping control. Millions earned low pay. Walmart tried to hide the no insurance no benits jobs. Thsy will hold those 2hrs back. N reason to lack in this world pleanty of resources. Share one haad wah another give up some of the power. Presisdt 1 millon paid spent millions to get job for the power. Comerical to gget a job for 1 mill. Spent it is a mess mess emss.
Paper Grade Sheet Paper: _________________ Student ___________________ Category 100% 75% 50% 25%Structure Structure is complete and shows clear, Structure is complete and shows Structure is started and includes Structure and topics are just10 % Cover Page Abstract logical, relationships between all topic clear, logical relationships between some topics and subtopics. attempted.Introduction Body and subtopics. most topics and subtopics.Conclusion AppendixBibliographyOrganization, Spelling, and Information is very organized with well- Information is organized with well- Information s organize, but not Information appears to begrammar constructed paragraphs & headings. No structured paragraphs. Few spelling well constructed Some spelling disorganized. Spelling and10% spelling & grammar errors an grammar errors. and- grammar errors. grammar errors.Quality of information Information clearly relates to the main Information clearly relates to the Information clearly relates to the Information has little or nothing to40% topic. It includes 3 or more supporting main topic. It provides 1-2 main topic. No details and/or do with the main topic. and/or examples. supporting details and/or examples. examples given.Full 4-sentence paragraphsQuantity of Information All questions are addressed and Most questions are addressed and Some questions are addressed and One or more topics were not30% answered. answered. answered. addressed.OutlineSources All sources (information and graphs) are All sources (information and graphs) All sources (information and Some sources are not accurately5% accurately documented in APA format. are accurately documented, but few graphs) are accurately documented. are not in APA format. documented, but many are not in APA format.Smart inking Paper submitted, return comment sheet Paper submitted, return comment Paper submitted. Paper not submitted.5% included, corrections made. sheet included.Total Points
APA STYLE CITING RQUIREDWhat did you use to gather info?Which info or organizations did Info come form?Include entire sight if on the web so we can fing it.http://www.aicpa.org/InterestAreas/BusinessIndustryAndGovernment/NewsAndPublications/DownloadableDocuments/3Q_2012_EOS_Slides.pdfhttp://www.gpo.gov/fdsys/pkg/ECONI-2012-07/pdf/ECONI-2012-07-Pg17.pdfhttp://www.aicpa.org/InterestAreas/BusinessIndustryAndGovernment/NewsAndPublications/DownloadableDocuments/3Q_2012_EOS_ES.pdfBe sure to site graphs toohttp://owl.english.purdue.edu/owl/resource/560/01/Helpful sights not used yetwww.bea.gov www.uscensus.gov
IndicatorsCapacity Use2007 http://www.gpo.gov/fdsys/pkg/ECONI-2007-12/pdf/ECONI-2007-12-Pg17.pdf2008 http://www.gpo.gov/fdsys/pkg/ECONI-2008-12/pdf/ECONI-2008-12-Pg17.pdf2009 http://www.gpo.gov/fdsys/pkg/ECONI-2009-12/pdf/ECONI-2009-12-Pg17.pdf2010 http://www.gpo.gov/fdsys/pkg/ECONI-2010-12/pdf/ECONI-2010-12-Pg17.pdf2011http://www.gpo.gov/fdsys/pkg/ECONI-2011-12/pdf/ECONI-2011-12-Pg17.pdf2012http://www.gpo.gov/fdsys/pkg/ECONI-2012-08/pdf/ECONI-2012-08-Pg17.pdfISM Manufacturing Report on Business® PMI History 1948-2012http://www.ism.ws/ISMReport/content.cfm?ItemNumber=10752&navItemNumber=12961U.S. Manufacturing CorporationsSeasonally Adjusted Quarterly After-Tax Profits (Billions of dollars)2001-2012http://www2.census.gov/econ/qfr/current/qfr_mg.pdfEstimated Sales and Inventories of U.S. Merchant Wholesalers: 2002-2010http://www2.census.gov/wholesale/pdf/awts/2010_awts_salesinv_table1.pdfhttp://www2.census.gov/wholesale/pdf/awts/2010_awts_salesinv_nomsbo_table2.pdf