The current status of the economy trends and change from previous year
Using the real GDP growth to explain the current state of the economy we find that there was growth of the economy in the country. Immediately after the year 2010 started there was fall on real GDP growth but from then on there was constant rise on the real GDP growth until the end of the year. This indicated that the economy on the other hand was constantly growing throughout the year 2010. The results of a constant rise in GDP throughout the year 2010 are that there was a healthy and a sustainable economy since there were no trends of rise and fall but a trend of constant rise which meant there was a smooth economic growth throughout the year 2010.
Using the consumer price index to as we find out that there is economic growth remains dormant since there was no change in consumer price index between end of the year 2010 and the beginning of the year 2011. This was also observed at the mid year of 2010 and that the consumer price index has a propensity of dormancy. The dormant consumer price index indicates that there was no economic growth nor was economic decline. There were no trends of rise and fall consumer price index between the end of the year 2010 and the start of the year 2011. Instead there was dormant trend which indicted a dormant economy whose result is an unhealthy economy. The economy in this case simply is unhealthy because it shows no efforts towards steering the economy. The dormancy in demand for goods further indicates that the other factors and indicators of the economy such as production rate may be affected as there are no people to buy the goods. The increased consumer demand for good always leads to increase in the production as firms produce more to meet this demand. Thus for the for a healthy economy measure that would see to it that would see to it that the consumer index price increase were necessary.
The current status of the economy by using industrial production would be an indication of decline in economic growth since there was a decline in the percentage of the industrial production being realized between the end of the year 2010 and the beginning of 2011. However this indicator is not always true. At the end of the year comes with a lot of holidays that lead to consumer demand of goods and increased production. At the beginning of the year most people are back to work and many companies are only undertaking on the strategies and plans of the following year so there might not be a lot of good being manufactured at this period. This accounted for the trend where there was a big rise in the industrial production and then ether was huge fall in the industrial production as the year ended. In this case the economy is very unhealthy but it is an excepted seasonal change and so many companies and even the government are always prepared.
Using ten year treasury interest rates as indicators the current status of the economy shows a decline in economic growth as there was a rise in the interest rates which lead to lower levels of investment leading to decline in economic growth. When people are charged high interest rates on the loans they tend to not to go for loans as capital for putting up business. This means that there will be less people investing and thus a decline in the economy. In this case the interest rate was increasing from the year 2010 and went on rising to the year 2011 showing a smooth trend of fall. This was an indication of the constant decline economy and thus an unhealthy economy. When the 3 months treasury interest rate is used the current status of the economy is constant as there was no increase or decrease of the interest rate that was realized. This dormant trend also shows the economy is unhealthy and that a dire action to steer it need to be put in place. An example is through fiscal policies that would reduce the interest rate.
The Non- Farm Payrolls indicates a growth in the current status of the economy. There was a rise in the non- farm payrolls which indicated that there were more people employed and thus increase in the growth of the economy. There change from the previous year to the New Year showed a decline in the non farm payrolls but it was followed by an immediate increase as the year got older. Thus there was a trend of rise and fall but the fall that the there was an immediate increase to the current status after the fall it indicated a healthy economy which was growing. The rise in the pay roll has to remain high so that the economy remains healthy by seeing to it that people are in employment places and are earning a living.
Using the unemployment rate there was growth in the current status of the economy as indicated by the decline of unemployment rate. The change from the previous year showed a constant decline of the unemployment rate which indicated that the economy was healthy and on a constant trend of growth. Measures that would see to it that more job opportunities need to be put in place to maintain the healthy economy. For example the interest rate could be reduced to ensure that more people take loans and invest. This way they offer employment opportunities that give people an income and cause a rise in demand for the good.
How the economy is doing
Looking at all the indications the various indicators have given, it is possible to tell how the economy of country was doing. Three out of the six indicators showed that there was a growth of the economy. These were the unemployment rate, change in non-farm payrolls and the real GDP growth. One of the six indicators, the consumer price index, showed that the economy was dormant while the other two which were the industrial production and the interest rates indicated a decline in the economy. There were more indicators of growth of the economy than decline that thus from this perspective the economy was growing and healthy. Of the only two indicators of decline , it is not always true that decline in industrial production will always mean a decline in the growth of the economy and this further testifies to the fact that the economy is at the current state is growing.
The indicators that show growth are not only more in number but they are also very important. For example the here is the decreased unemployment rate and the increased payrolls which would mean that are large number of people are earning and that they working productively in the economy. When people are employed and are earning it means that they are in a position to buy goods and service since they have the money. This in one way indicates that the demand for goods may arise as a result of increased payroll and decreased unemployment rate. The vice verse that there is a decrease in the payroll and increase in unemployment may mean that there will be less demand for goods as people are not employed and have no source of income implying that they have no money to purchase the products. This means that there will be less demand for goods. This makes the two indicators that indicate growth very important as they may counter the effect of the decline in that economy that result from the decline in the consumer demand for goods.
Predicating the economy in a years time
Where at the current state there is economic growth as indicated by the three indicators, it is unlikely that the growth of the economy would rise at the end of the following year. Thus the economic growth is likely to decline at the same time the following year. This is because of the interdependence of the indicators that exists and controls the economy. If all the six indicators are not indicating a growth in the economy it means that if a regulation is not put in place the most likely thing to happen is decline in the economy despite the existence of a prior growth. I our case it is notable that the there was dormant consumer price index which is likely to affect even the growth being realized through the other indicators after a short period of time. This is because the increased demand is supposed to cause the GDP to increase while causing prices to go up and. This in turn is supposed to cause companies increase the amount of good s they produce so as to meant the demand of the good. To increase the production the companies and firms will need to hire more laborers for the job. This way the payroll is increased at the same time the rate of unemployment goes down. The increased demand for good may necessitate the increase in the demand for loans so that people may be able to acquire the goods. This in turn leads to increased interest rates. Thus the fact that the consumer price index is dormant is likely to affect the other economic indicators so negatively so that the economy is going to decline. Economic decline comes about when the there is a reduction in demand for goods and services which reduce the rate of production. When firms of have decreased rate of production they will reduce the number of worker maybe through retrenchment programs and thus decreasing the payroll and increasing the production rate. The reduce demand for good will also lead to less borrowing of loans as there aren’t many people will to purchase goods. This will lead to decreased interest rates for loans. The decreased demand for goods as may be seen to positively affect the interest rates whereby it causes decrease I the interest rate and causes more people to come up with investment and create employment but people are not likely to invest when there are no people to use their products as the demands for the consumer goods low. If the government fiscal policies don’t succeed in elimination of the declining consumer demand for goods the whole economy might as reel backwards. It is only when a balance is strike effectively in all the economic indicators that a constant growth in the economy may be realized. If this balance is not achieved then there arises a trend of rise and fall that make the economy unhealthy and unpredictable.
Cliff, M. (2003). Economic indicators. United states. Looseleaf Law Publications.
McCollum, B. (2002) Increased employment rate and economic growth. United states. DIANE Publishing
White, J. (2006). The US fiscal policies in regulating the economy, 5th ED. Belmont. Thomson-Wadsworth