Industry Impacted By The Macro Economy
Industry Impacted by the Macro Economy research papers take a vast amount of time to outline and write. Here is a suggestion on how Paper Masters lays out an assignment like that.
Industry Overview Paper
Prepare a research paper, using the APA style and including references, based on an industry (examples of industries clearly impacted by the macro economy include: automotive, home building, steel, airlines, household appliances). You are encouraged to discuss the subject of your project with your instructor as soon as possible to facilitate your efforts to complete the best possible project. Include in your research paper the following:
- A brief history of the industry
- An industry overview.
- Describe the expected impact of the following economic indicators on the external environment of your chosen industry:
- The impact of real GDP or GNP
- The unemployment rate
- The inflation rate as measured by the consumer price index (CPI).
- Three additional economic indicators of your choice on your industry, from the following list:
- Interest rate (for example: mortgage rate, prime interest rate, fed funds rate, discount rate, three month treasury bill, 10 year treasury bond)
- Retail sales
- Capacity utilization
- Housing starts
- Auto sales
- Foreign exchange rate
- Producer Price Index (PPI)
- Personal income
- S&P 500
- DJIA, NASDAQ
- Money supply (measured by M1, M2, or M3)
- Federal Reserve actions
Utilizing the six economic indicators you used in the Industry Overview Paper or other macroeconomic indicators of your choice, prepare research paper, using APA formatting and including references, in which you define each of the six indicators, and describe its current status. In addition, describe the historic trend for each of the indicators over the last three to five years.
The following are good sources of information and forecasts for various economic factors at the regional and national level:
- The Conference Board
- The Mortgage Banker's Association
- The Federal Reserve
- The Congressional Budget Office
- The BEA (Bureau of Economic Affairs)
- The Labor Department
Over the course of the last four years, downturns in the American economy have promulgated loses in a number of different industries. Nowhere has this impact been more notable than in the airline industry. Although analysts argue that the September 11th terrorist attacks served as the impetus to place the airline industry in a downward spiral, the inability of the economy to recover is what has served as the basis to keep the airline industry on the skids. With the realization that the macro economy has played such a significant role in the decline of the airline industry, this investigation considers what experts on the subject have written about the overall process. By examining factors such as the real impact of the GDP, unemployment rate and inflation, it will be possible to demonstrate how the macro economy can shape industry in the United States.
The results of this investigation show two notable trends. First the macro economy and the financial health of the airline industry are integrally linked. Second, the macro economy and the financial health of the airline industry are specifically linked with regard to the GDP, unemployment rate and exchange rate. Decreases in the interest rates and improvement in the real estate market do not provide adequate measures for assessing the overall strength of the airline industry.
A critical review of what has been written about the current state of the economy seems to suggest that at the present time, the macroeconomy is slowing. Although some analysts predict that the slow in the economy will make for a soft landing overall, some experts argue that a recession may be in the near future. Although experts seem to believe that the economy is slowing, the central issue that needs to be answered in this case is: What are the factors that are contributing to the current state of the economy?
Examining the specific variables that have been noted as drivers for a slowing economy, experts report that increased consumer spending and slowing inflation coupled with dips in the housing market and slower than expected GDP growth all combine to create the current economic situation. Further experts report that the Federal Reserve has utilized interest rate hikes in recent months to soften the current economic downturn. By raising interest rates, only minimally, the government has been able to reduce the threat of inflation by slowing economic growth. The goal in this case was to slow economic growth but not bring it to a grinding halt.
Even though there is evidence that the economy is slowing, there is also evidence that improvements may be occurring for many individuals. Researchers note that unemployment in the US has dropped to 4.7 percent. In addition, in many parts of the country, employers are reporting labor shortages. As a result real earnings for employees are increasing at a rapid rate. This situation has positive ramifications for bolstering consumer confidence and spending. Thus, it is not surprising to find that, despite some negative news, the economy is still gaining strength in some areas.
Despite the fact that the economy has been supportive of wage earners in recent months, a new Gallup Poll commissioned in August found that only 22 percent of the American public believes that the economy is getting better. This confidence level is lower than it has been in five years. Kirchhoff notes that while this mood has not impacted consumer spending as of yet, Americans are currently carrying high debt and are concerned about issues such as high gas prices and international strife. As such, it is reasonable to assume that consumer spending could quickly decline in coming months.
When placed in this perspective, it becomes evident that oil prices also have a substantial impact on the development of the economy. Consumers burdened with higher energy prices have less money to spend in other areas. High oil prices also have an impact on the housing market, which in recent months has begun to decline. Even though some analysts believe that the slump in the housing market will not have much of an impact on the economy, other analysts believe that even a mild recession in the housing market will have depression-like effects on the larger macroeconomy.
Other experts examining the macroeconomy and its current position contend that interest rates play a critical role in the development of the economy. Currently, the Federal Reserve has placed a hold on increasing interest rates. However, there is some concern that the recent rate hikes, if not repealed by early next year, will continue to foster downturns in economic growth. For the most part, experts seem to agree that inflation has come in check. Here again there is some concern that inflation will not remain in check if problems with the housing market become more pervasive.
All of the changes that have taken place in the macroeconomy have fueled changes in the stock market. A slowing economy and receding inflation have prompted spikes in the nation's bond markets. If the current rally lasts, it will make it easier for investors to purchase stock with less risk. In the end, this could lead to increased revenues for investors. When the economy does eventually hit bottom, increased wealth for investors may fuel spending making it possible for the economy to avoid a hard landing or a potential recession
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