The President’s Dilemma

Task: Create a memo with our analysis of how the current unemployment, inflation, and economic growth compare to leading economic indicators in the past.
When we consider how we can develop an economic policy to reduce the economic crisis, we would have to encounter the economic indicators, which is a statistic of the economy that involves leading indicators, coincident indicators, and lagging indicators. First, the leading indicators are indicators that usually change before the economy as a whole changes, and are used for short-term predictors of the economy. These include the the stock market, index of consumer expectations, money supply, and many others. When looking at the statistics given, the nominal debt has become 14,000 trillion dollars which is the highest of all times since 1929. But in 1946the nominal changes in GDP was -11.0%, which is the worst up to now which tells us that this situation we are in is not as bad.
Secondly, we would have to look at the coincident indicators which include the number of employees, industrial production, personal income, etc. In the statistics, we can see that the nominal GDP has been steadily increasing from 1933 at 14,567.8 billion dollars in 2010, but from the memo it states that the GDP has dropped by 13% which tells us that we are in a economic crisis.
And lastly, we need to consider the lagging indicators that involve the ratio of of manufacturing and trade inventories to sales, the change in labour cost per unit of output, etc. The rate of inflation is at 9% which is almost as bas as in 1940, and the unemployment rate is at 12.5% which has been the second to worst rate (the worst being the period of the Great Depression). So knowing that there were periods that experienced a worse economic crisis, it tells us that the economy still has a chance of rebuilding itself together.

This entry was posted in Economics, Section 3. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s