Macroeconomic and Industry Analysis
The economic indicators play very important part in todays society forecasting, as they might help to see the ways businesses might develop in the nearest future through analyzing the current state of the economy. The statistics about an economic activity is called an economic indicator. The study of such indicators is connected to business circles, which include earnings reports, various indices, and economic summaries (Sheffrin, 2003).
Business cycle or economic cycle is about fluctuations that are economy-wide and are in trade, production, and other economic activities in general over some period. In other words, this is a downward and upward movements of GDPs (gross domestic product) levels, and refers to the period of contractions and expansions in the scale of economic activities (business fluctuations). This is all measured around its long-term growth trend.
The macroeconomic statists is typically grouped into the three categories know as leading, lagging, and coincident. Leading economic indicators are based upon ten measures and indicate the peaks of the business cycle, three to twelve months before it actually happens. Coincident Economic Indicators are about measurements, which indicate the business cycle peaks and pitfalls at the current moment. They are used as a preliminary source to document the official turning points of the business cycle. Lagging Economic Indicators is a group that has seven measures and indicates the peaks and troughs of the business cycle three to twelve months after it has already happened. The indicators are very useful separately, but once they are combined together, they give an overview on the situation in the economy for some period by providing deeper insight into the business cycle activities. Business cycle activity tracking, especially trough and peak turning points, can be extremely useful. For the beginning, knowing such information might help to predict, anticipate, and possibly avoid the problems that are related to inflation and unemployment (Moffat, n.d.).
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Leading economic indicator can mostly help us to predict the direction economy is heading to. Market indexes, which are current and constantly updated, have a predictive value for investors. Unfortunately, these indexes do not look too much into a future. Another useful source can be The Jobless Claims Report, which the Department of Labor releases weekly. If the economy is weakening that is shown through unemployment trade and the way it comes upwards. Money supply is next useful source, as it is a technical calculation, which is showing how much money is sloshing. The Federal Reserve releases it on a regular basis. Other indicators and data that are to be considered may be taken from the New Residential Housing Construction Report, Existing Home Sales Report, Consumer Confidence Index (CCI), Purchasing Managers Index (PMI), Durable Goods Report (DGR), and others (Investopedia, 2013).
Based on the analysis and research that I have conducted, I would be inclined to say that now the U.S. economy is in a mid-cycle expansion with the slow, but relatively steady, pace of the constant recovery. Unfortunately, the U.S. labor market might still be showing some unexpected twists, and this is mainly a result of the federal government employment decline due to the expected budget reductions. Good is the fact that around 82 percent of the leading indicators are expanding, and several indicators give a proof that the recovery is firm (Hofschire, Emsbo-Mattingly, 2013).
In this research, I would like to pay attention to some specific industries, such as manufacturing and government employment industries. To my mind, based on the economic indicators, such industries as housing market, wind energy industry, retail industry, manufacturing, and others are rapidly recovering. There are certain life cycles of the industries, which include introduction, growth, maturity, and decline (Inc, n.d.). Manufacturing industry is rapidly evolving, mainly because of new software technological era, and this will continue to bring huge growth in the future. That is why to my mind I would say that this industry is entering a new life cycle and is on the growth stage steadily moving forward (Lopez, 2013). These have a positive impact on competitive and earning structures.
Unfortunately, the employment industry, especially the government sector, is not developing that confidently. The Presidents administration continues to cut budget on governmental sectors, such as medical care, social security, and others. This all has some negative impact on the trend, but luckily, the overall leading indicators remain healthy, putting a labor market in a slow repair state. To my mind, the overall employment industry has also started a new cycle after its deployment in the past, and is at a very begging of introduction stage. However, the public employment sector continues to decline, which makes the situation very challenging, as the private sectors rapidly develops (Mukherjee, 2013).
Monetary policy has a direct influence on inflation and financial conditions of the economy-wide demand for services and goods. Because of the U.S. overall economy improvement, additional traction is gained by monetary policy, because of the recent fiscal restraint increase this does not lead to immediate strong growth. Inflation will remain muted and employment rate will slowly continue to improve. Significantly, fiscal policy, which is more restrictive, has given a push to the fact that economy is growing quicker. The impulse from local and state governments, which subtracted from growth before in the recovery, has moved from negative to close to neutral. The act that was about payroll tax rates increase, the overall increase in taxes and the rise in high income tax rates will result in a fiscal drag of GDP. For the moment, based on the research I have conducted, the countrys government has implemented the proper fiscal and monetary policy (Dudley, 2013). I hope that in 2014, the U.S. economy will continue to grow, especially government employment industry.
- The Economic Outlook and the Role of Monetary Policy - FEDERAL RESERVE BANK of NEW YORK
- Industry Life Cycle - Encyclopedia - Business Terms | Inc.com
- Economic Indicators That Help Predict Market Trends
- The New Manufacturing Lifecycle: An Interview With PTC's Hepplemann
- A Beginner's Guide to Economic Indicators
- Nonresidential Construction Weighed Down by Private Sector – AIER